INTERNATIONAL TROPICAL TIMBER ORGANIZATION

ITTO

PROJECT PROPOSAL

TITLE: TRACEABILITY OF TIMBER PRODUCED BY FOREST CONCESSIONS AND NATIVE COMMUNITIES IN MADRE DE DIOS AND UCAYALI

SERIAL NUMBER: PD 621/11 Rev.3 (M)

COMMITTEE: ECONOMIC INFORMATION AND MARKET INTELLIGENCE

SUBMITTED BY: GOVERNMENT OF PERU

ORIGINAL LANGUAGE: SPANISH

SUMMARY

This project will be implemented with small and medium timber producing enterprises (SMEs), including native communities and forest concessions in Madre de Dios and Ucayali, as well as timber processing and marketing SMEs, located in the two aforementioned regions as well as in Lima and Arequipa. The project will promote the use of timber sourced from forests under sustainable forest management, with the aim of enhancing the transparency of timber marketing and improving forest governance in the Peruvian Amazon region through the participation of indigenous peoples and small and medium enterprises as key stakeholders in the conservation of forests.

Furthermore, the project will build the capacities of farmers, technical personnel and other administrative and executive staff in the management of forest businesses. It will also develop and propose a traceability system that will allow producers to certify the legal origin of marketed timber. The volume of timber harvested from sustainable sources will be increased and guaranteed by a forest certification process and, upon project completion, a timber traceability model will be available and implemented by the SMEs in the regions of Ucayali, Madre de Dios, Lima and Arequipa.

EXECUTING AGENCY NATIONAL FORESTRY CHAMBER -- CNF

DURATION 27 MONTHS

BUDGET AND PROPOSED Source Contribution FUNDING SOURCES in US$ OIMT 349,032.00 CNF 278,125.00

TOTAL 627,157.00

TABLE OF CONTENTS

PROJECT BRIEF ...... 3 LIST OF ABBREVIATIONS AND ACRONYMS ...... 5 MAP OF PROJECT AREA...... 6 PART 1. PROJECT CONTEXT...... 7 1.1 ORIGIN ...... 7 1.2 RELEVANCE...... 8 1.2.1 Conformity with ITTO’s objectives and priorities ...... 8 1.2.2 Relevance to submitting country’s policies...... 8 1.3 TARGET AREA...... 9 1.3.1 Geographic location ...... 9 1.3.2 Economic, environmental, cultural and social aspects...... 10 1.4 EXPECTED OUTCOMES AT PROJECT COMPLETION...... 13 PART 2. PROJECT RATIONALE AND OBJECTIVES...... 14 2.1 RATIONALE ...... 14 2.1.1 Institutional set-up and organizational issues ...... 14 2.1.2 Stakeholder analysis ...... 16 2.1.3 Problem analysis ...... 20 2.1.4 Logical Framework Matrix...... 22 2.2 OBJECTIVES TREE...... 24 2.2.1 Development objective and impact indicators ...... 25 2.2.2 Specific objective and outcome indicators...... 25 PART 3. DESCRIPTION OF PROJECT INTERVENTIONS ...... 26 3.1 OUTPUTS AND ACTIVITIES...... 26 3.3.1 Outputs...... 26 3.3.2 Activities ...... 26 3.2 IMPLEMENTATION APPROACHES AND METHODS ...... 31 3.3 WORK PLAN ...... 32 3.4 BUDGET...... 33 3.4.1 Consolidated budget by component...... 33 3.4.2 ITTO budget by component...... 36 3.4.3 Executing agency budget by component ...... 36 3.4.4 Budget by activity and component (US$)...... 37 3.5 ASSUMPTIONS, RISKS AND SUSTAINABILITY ...... 38 3.5.1 Assumptions and risks...... 38 3.5.2 Sustainability ...... 38 PART 4. IMPLEMENTATION ARRANGEMENTS ...... 40 4.1 ORGANIZATION STRUCTURE AND STAKEHOLDER INVOLVEMENT MECHANISMS...... 40 4.1.1 Executing agency and partners...... 40 4.1.2 Project management team ...... 41 4.1.3 Project Steering Committee ...... 41 4.1.4 Stakeholder involvement mechanisms...... 41 4.2 REPORTING, REVIEW, MONITORING AND EVALUATION ...... 41 4.3 DISSEMINATION AND MAINSTREAMING OF PROJECT LEARNING ...... 42 4.3.1 DISSEMINATION OF PROJECT RESULTS ...... 42 4.3.2 Mainstreaming of project learning ...... 43 ANNEX 1. PROFILES OF THE EXECUTING AND COLLABORATING AGENCIES ...... 44 ANNEX 2. TASKS AND RESPONSIBILITIES OF KEY EXPERTS PROVIDED BY THE EXECUTING AGENCY 46 ANNEX 3. TERMS OF REFERENCE OF PERSONNEL AND CONSULTANTS AND SUB- CONTRACTS FUNDED BY ITTO ...... 47 ANNEX 4. RECOMMENDATIONS OF ITTO’S EXPERT PANEL...... 49 ANNEX 5. MASTER BUDGET ...... 50

- 2 -

PROJECT BRIEF

Traceability involves a series of closely interlinked technical and operational procedures that provide for the registration of all products from the source or place of origin of the raw materials, through their processing stages and transport, to the final marketing stage. This benefits forest concessions (producers) and timber companies (processors) by giving them credibility, ensuring the legality of their products in the market (consumers) and providing an efficient monitoring and management system for the competent forest authority.

Several Peruvian initiatives have emerged through the implementation of different projects aimed at preventing and correcting the deficiencies detected to date in timber logging, transport and marking procedures, and specialized software has been developed to this end. A brief survey of the functioning and policy implementation of these companies has revealed that very few of them use these types of tools to monitor and obtain detailed data about their production.

This project is based on the experience gained in three previous projects that were submitted and/or financed by the ITTO and endorsed by the DGFFS i.e. Project PD 421/06 (F) “Strengthening of the Production Chain for Timber from Forest Concessions and Other Forests under Management”, implemented by CNF; the project on “Capacity Building for the Production and Marketing of Certified Timber by Indigenous Communities in Ucayali, Peru”, submitted by the NGO AIDER; and the project proposal of the NGO BSD “Geo-electronic forest traceability applied to timber sourced from 191,718 ha of forests belonging to six indigenous communities and one forest concession in the Ucayali Region”, which were the basis for the formulation of this project proposal, incorporating lessons learned and strengthening the elements requiring improvement.

The main problem that has been identified is the limited capacity of SMEs to prove the legal origin of their timber supply. This results in lost opportunities to access better markets that demand proof of legal origin and sustainable management of the timber to be traded.

The Project’s development objective is: “To contribute to increasing the trade in timber of legal origin sourced from sustainably managed forests of native communities and forest concessions in the Peruvian Amazon Region”. The achievement of this objective will be measured by the increase in the volume of exported certified timber that is sourced from forest concessions and native community forests; the use of certified timber by central and regional government institutions for their public works projects; and the overall demand for certified timber in the market.

This development objective will be achieved through the following specific objective: “Strengthen the capacity of small and medium forest enterprises to demonstrate and verify that the timber produced and traded is sourced from forest concessions and native community forests that are under sustainable forest management”. The achievement of this objective will be measured by the establishment of a market-recognized national forest certification system.

The project will benefit 15 community enterprises and SMEs in the Ucayali, Madre de Dios, Lima and Arequipa regions. It is expected that after project completion, community enterprises and SMEs will be able to manage their forest businesses, achieve satisfactory returns and demonstrate the legality of their products by promoting the establishment of a national traceability system, thus improving the sustainable management of their forests. Furthermore, it is expected that legally sourced timber will have better commercial opportunities and will be incorporated into the national production chain, thus increasing the volumes of sustainably sourced timber in the market.

Expected project outputs include: the adoption of a timber traceability system by timber enterprises and native communities; capacity building for the technical personnel of target enterprises so as to have good timber production and marketing monitoring and control systems; and strengthening of forest enterprises in business management activities.

The project will be implemented through the following implementation strategies: (i) develop and validate a traceability system; (ii) promote the marketing of certified timber; (iii) develop training

- 3 - courses on timber product monitoring and control, (iv) provide technical assistance to SMEs and native communities; (v) promote the sharing of experiences in timber certification and traceability among entrepreneurs, forest concession holders, native communities and forest professionals; (vi) organize training workshops on business management tools; (vii) provide ongoing technical assistance to community enterprises and SMEs so as to strengthen their management capacities.

With regard to sustainability, the project will develop the capacities of community members and businessmen to manage their forest business initiatives. The transfer of knowledge and the dissemination and promotion of ITTO principles and guidelines will ensure that not only forest producers but civil society at large will become aware of the need to produce traceable products and thus ensure that timber activities are no longer considered to be plundering forest resources and can actually contribute significantly to the GDP. At the social level, the project will implement a facilitation strategy aimed at building local capacities and empowering men and women with the proposal for the sustainable production and marketing of certified timber. The technical assistance provided by the CNF (National Forestry Chamber) will ensure the practical application of the knowledge acquired through training courses for production forest management stakeholders represented by forest concession holders, native communities and forest enterprises. In view of the institutional support it enjoys and the experience it will have gained through the implementation of the project, the CNF, or one of its associated institutions, plans to become a certifying agency to certify the legal origin of timber through the traceability system.

A possible risk envisaged by the project could be that the Government stops promoting sustainable forest management practices, which this would create a conflict with the provisions of the current national forest legislation. In order to counteract this potential risk, the CNF will be participating in many fora, together with civil society representatives, to lobby and engage the current government and thus create awareness and promote actions aimed at combating illegal forest activities.

As risk mitigation measures, the executing agency plans to attract the participation of national forest sector authorities in the project; create awareness and constantly coordinate with officers from the Regional Governments of Ucayali and Madre de Dios responsible for forest promotion actions; and participate in civil society dialogue and coordination fora with the State.

The project has a total budget of US$ 762,284 627,157. The executing agency will provide a total of US$ 328,819 278,125 in kind, with the remaining US$ 433,465 349,032 to be contributed by ITTO.

- 4 - LIST OF ABBREVIATIONS AND ACRONYMS

ADEX Asociación de Exportadores (Exporters Association) AEMRU Asociación de Extractores Madereros y Reforestadores de la Región de Ucayali (Timber Logging and Reforestation Association of the Ucayali Region) AFORPYME Asociación Forestal de Pequeños y Medianos Productores y Empresarios del Perú (Small and Medium Forest Producers and Industrialists Association of Peru) AIDER Asociación para la Investigación y el Desarrollo Integral (Association for Integrated Research and Development) AIDESEP Asociación Interétnica de Desarrollo de la Selva Peruana (Inter-Ethnic Association for Development in the Peruvian Rainforest Region) AMDU Asociación de Madereros del Departamento de Ucayali (Timber Producers Association of the Department of Ucayali) APIF Asociación Peruana de Ingenieros Forestales (Peruvian Association of Forest Engineers) BSD Bosques, Sociedad y Desarrollo (NGO, Forests, Society and Development) CIP Colegio de Ingenieros del Perú, Capítulo de Ingeniería Forestal (Peruvian Society of Engineers, Forest Engineering Chapter) CNF Cámara Nacional Forestal (National Forestry Chamber) CONAMYPE Confederación Nacional de Gremios de la Micro y Pequeña Empresa en el Perú (National Confederation of Micro and Small Enterprise Associations) DGFFS Dirección General Forestal y de Fauna Silvestre (General Forest and Wildlife Directorate) EU European Union FORESTAS Asociación Civil para el Desarrollo Forestal (Civil Association for Forest Development) INEI Instituto Nacional de Estadística e Informática (National Institute of Statistics and Information Technology) ITTA International Tropical Timber Agreement ITTO International Tropical Timber Organization MINAG Ministerio de Agricultura (Ministry of Agriculture) MINCETUR Ministerio de Comercio Exterior y Turismo (Ministry of Foreign Trade and Tourism) NCs Native communities NGO Non-governmental organization ORAU Organización Regional AIDESEP Ucayali (AIDESEP Regional Organization - Ucayali) OSINFOR Organismo de Supervisión de Recursos Forestales Maderables (Timber Forest Resources Supervisory Agency) PRODUCE Ministerio de la Producción (Ministry of Production) PROMPERÚ Comisión de promoción del Perú para la exportación y el turismo (Export and Tourism Promotion Commission of Peru) PRONATURALEZA Fundación Peruana para la Conservación de la Naturaleza (Peruvian Foundation for the Conservationn of Nature) RAP Red Ambiental Peruana (Peruvian Environmental Network) REDD Reducing Emissions from Deforestation and Degradation SMEs Small and Medium Enterprises UNALM Universidad Nacional Agraria La Molina (National Agrarian University of La Molina) YPO Yearly Plan of Operation

- 5 - MAP OF PROJECT AREA

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PART 1. PROJECT CONTEXT

1.1 Origin

The project will take into account the following mega-trends:

 Globalization of markets  Growing preference for ecological products.  More demanding and environmentally-aware consumers.  Fast rate of technological change.

From 2008 to 2010, with the technical and financial support of the ITTO and the cooperation of the General Forest and Wildlife Directorate (Dirección General Forestal y de Fauna Silvestre – DGFFS), the National Forestry Chamber (CNF) implemented ITTO project PD 421/06 (F) “Strengthening of the Production Chain for Timber from Forest Concessions and Other Forests under Management”. This project identified the main “bottlenecks” weakening the timber production chain in the central and southern economic corridors of Peru. Forest concessions, industrial timber processing plants and timber marketing companies, all participated in the implementation of that project. Project outputs included a pilot traceability system, the Timber Origin Monitoring System (Sistema de Seguimiento del Origen de la Madera – SISOMAD) and a data-processing software program, after having carried out relevant tests in concessions and companies from Madre de Dios and Ucayali.

This project proposal is based on the experiences of two Peruvian projects in the area of traceability. One was a project proposal on “Geo-electronic forest traceability applied to timber sourced from 191,718 ha of forest belonging to six indigenous communities and one forest concession in the Ucayali region” through which the NGO BSD sought to demonstrate that forest users can implement and use a geo-electronic traceability system to ensure transparency in the trade of their timber sourced from tropical forest concessions and from native community lands. The other one was a project proposal formulated by the NGO AIDER on “Capacity Building for the Production and Marketing of Certified Timber by Indigenous Communities in Ucayali, Peru”, whose objective was “To strengthen the capacity of Shipibo Konibo communities for the consolidation of a viable and profitable model of certified timber production and marketing in the Ucayali Region, Peru” through the implementation of a forest consortium made up of Shipibo Konibo native communities, which markets certified timber sourced from legal and sustainable sources, thus benefiting 8 native communities of the Shipibo Konibo indigenous ethnic group settled in the districts of Calleria, Masisea and Iparia, in the Coronel Portillo province of the Ucayali region, with a total area of 40,000 hectares in the middle basin of the Ucayali river, the main tributary of the Amazon river. Furthermore, this project proposal is also based on the initiatives of some regional governments, such as the Arequipa and San Martin regional governments, who have been promoting the utilization and marketing of legally sourced timber.

The project also draws on and is consistent with the demands of the international market, through the Lacey Act (USA, 2008) and the Due Diligence legislation (EU, 2009), both of which require the timber industry to verify the origin of timber imported into their respective countries. The implementation of the former began in April 2009, while the latter will come into force at the beginning of 2013.

- 7 - 1.2 Relevance

1.2.1 Conformity with ITTO’s objectives and priorities

This project proposal is consistent with the overall objective of ITTO (as set out in Article 1 of the ITTA 2006) i.e. to promote the expansion and diversification of international trade and to promote the sustainable management of tropical timber producing forests, as described below:

 The proposal will promote strategies for achieving exports of tropical timber products from sustainably managed sources (Objective d).  Furthermore, the project will promote improved understanding of the structural conditions in international markets (Objective e).  The project will encourage increased and further processing to promote industrialization and generate more employment opportunities and export earnings (Objective i).  The project will improve marketing and distribution of timber exports (Objective k).

Moreover, this project is consistent with the priorities established in the ITTO Action Plan 2008-2011. The main aspects considered in the proposal are as follows:

 It will promote the monitoring of timber marketed on the domestic and international markets using new technology implemented by the companies concerned.  It will support increased efficiency in the processing and utilization of tropical timber.  It will promote improved trade information and competitiveness in international markets.  It will promote increased supplies of certified tropical timber from managed forests.  It will develop awareness on market requirements.  It will help improve the competitiveness of tropical timber; and will develop proposals to help overcome trade barriers and shortcomings in forest law enforcement.

1.2.2 Relevance to submitting country’s policies

Forestry Law 27308 promotes better timber utilization through integrated industries and generation of higher value added based on criteria and indicators for sustainable management (Art. 9). The State will promote the development of the forest industry with the active participation of the public and private sectors to ensure increased economic returns and social benefits and promote domestic and export timber marketing (Art. 30).

The Peruvian State, through its Ministry of Production, promotes timber investment, production and productivity; the establishment and expansion of infrastructure as required for the development of secondary timber processing industries in the Rainforest Region (Selva); processed timber exports; and generation, transfer and dissemination of appropriate technologies for increased development and efficiency in the timber industry.

Furthermore, the State, through PROMPERU, promotes timber and timber product exports to foreign markets and prioritizes the development of a diversified and high value-added export supply.

The National Agreement is the set of State policies adopted and signed in July 2002 by representatives of political organizations, civil society and Government.

- 8 - The aim is to integrate the national environmental policy with political, economic, social, cultural and land management policies, so as to achieve poverty alleviation and sustainable development in Peru. It is also aimed at institutionalizing environmental management, both public and private, so as to protect biodiversity, promote the sustainable utilization of natural resources, ensure environmental protection and promote sustainable population centers and cities, all of which will help to improve the quality of life of the population, especially of the most vulnerable sectors in the country (State Policy 19); strengthening the national capacity to develop and use scientific and technological knowledge so as to develop human resources and improve natural resource management and business competitiveness (State Policy 20); developing a foreign trade policy based on a joint public and private sector effort aimed at the competitive penetration of Peru into international markets (State Policy 22); promoting the agricultural and rural development of the country, including inter alia sustainable forest harvesting (State Policy 23).

Furthermore, the regional governments and other State institutions have a keen interest in ensuring that there is a considerable increase in the marketing of timber of verified legal origin.

1.3 Target area

1.3.1 Geographic location The Project’s administrative headquarters will be located in the city of Lima and the departments where it will implemented are as follows:

a) Madre de Dios: situated in the southern region of Peru, between geographic coordinates 9º57′ and 13º20′ latitude south, and 68º39´ and 72º31’, longitude west. The department covers a total area of 85,183 km2, which accounts for 6.6% of the total national territory and 15.3% of the Rainforest Region (Selva). It is divided into the provinces of Tambopata, Manu and Tahuamanu. The provinces of Tambopata and Tahuamanu, both timber producing areas, are part of the project’s target area. The capital city of this region is Puerto Maldonado, situated at 139 meters above sea level and at 2,024 km from the city of Lima, in the confluence area of the Tambopata and Madre de Dios rivers.

b) Ucayali: situated in the eastern rainforest area of the country. It has a total area of 102,410 km2 and its geographical coordinates are 07°20′ and 11°27′ latitude south, and 70°29′ and 75°58′ longitude west. The capital of this region is the city of Pucallpa, situated at 154 meters above sea level and 842 km from Lima, on the east bank of the Ucayali River. Three out of its four provinces are part of the project area: Padre Abad, Coronel Portillo and Atalaya, as primary timber producers.

c) Arequipa: situated in the southwest of Peru. It covers a total area of 63,345.39 km², which accounts for 4.9% of the total national territory. The region is located at an altitude of 2,335 m.a.s.l. and between geographical coordinates 14º36’ and 17º16’ latitude south, and 70º50’ and 75º05’ longitude west. Project activities will be concentrated in the province of Arequipa, as it is a timber consuming area.

d) Lima: situated in the central coastal region of the country. It covers an area of 34,948 km², which accounts for 2.7% of the national territory. Its geographical coordinates are 10º16’ and 13º19' latitude south and 75º30’ and 77º53' longitude west. The capital city of this region is Lima. Project activities will be concentrated in the provinces of Lima and Callao, as they are both timber consuming areas.

- 9 - 1.3.2 Economic, environmental, cultural and social aspects

Social and cultural aspects

A major part of the national timber activity is mainly carried out in the forests by non- local entrepreneurs who carry out the functions of harvesters-forest managers and who are the main suppliers of the timber market.

According to the population estimates provided by the National Institute of Statistics and Information (INEI), the following population figures were reported in 2009: Coronel Portillo 352,855 inhabitants Padre Abad 54,023 inhabitants Atalaya 47,285 inhabitants

According to the 2007 census, the growth rate between 1993-2007 was 2.2%. The population of the Department of Ucayali is mostly made up of migrants from the coastal (Costa), highlands (Sierra) and forest (Selva Alta) regions, who for the most part are settled in areas adjacent to the Pucallpa – Lima roadway. It should be pointed out that Ucayali is the 11th poorest department of the country, with 54% of its population living in poverty according to INEI's 2006 data.

According to the 2007 census, the provinces in the Madre de Dios Department had the following populations: Tambopata 78,523 inhabitants Tahuamanu 10,742 inhabitants

Seventy-two percent (72%) of the Madre de Dios population is concentrated in the province of Tambopata. With an annual population growth of 3.4%, mainly due to immigration, the department has one of the highest growth rates in the country, although it has been decreasing in the last decade. This department has the highest percentage of men (54%) in the country due to the situation of migrant populations and job availability.

According to INEI (2007), the province of Arequipa, Department of Arequipa, has a population of 842,880. Its capital city, Arequipa, is the second most important city of Peru after Lima in terms of population and also in terms of its consumption level and investment in infrastructure and services. It is one of the main timber and forest product sale and distribution areas in the southern corridor of Peru. The forest authority has approved 150 timber warehouses in this area, which market a monthly average of 30,000 – 50,000 board feet of resawn timber in commercial dimensions of 1, 1 1/2 and 2 inches thick, variable widths and 8 – 12 feet long.

The Department of Lima is located in the central-western region of Peru and covers inter-Andean and coastal areas. Its capital city, Lima, is also the capital of the Republic of Peru. It has a population of 7,605,742 (INEI 2007). There is currently a construction boom in this area with high demand for timber resources. The majority of both primary and secondary timber processing industries are located in Lima. The districts with the greatest concentration of timber companies are: Villa el Salvador with 10.9%, San Juan de Lurigancho with 10.4% and San Martin de Porres with 6.9%.

With regard to the employment generated by forest activities, it is estimated that about 250,000 local inhabitants of the Amazon region live off the timber industry. There have been reports of illegal loggers encroaching forest concession areas and native community lands to selectively log high value commercial species. Other reports indicate that there are people who use the roads built by the concessionaires and settle in the areas, thus generating a lot of tension, misunderstandings and disputes.

- 10 - The indigenous populations, organized into native communities, are being officially recognized as legal entities. To the extent that they are gradually connecting to the market and valuing money as a means of exchange for goods and services, they are being incorporated into economic activities and are starting to manage their forests with the support of the organizations in charge of development projects, as well as of timber companies that are facilitating financial resources and technical assistance to these communities.

Economic aspects

In the departments of Ucayali and Madre de Dios forest activities are very important not only because of the trade opportunities they generate, but also because of the number of people employed throughout the timber production chain. Furthermore, the profitability for entrepreneurs increases as more value added is given to the products, especially when these can be introduced into the main markets of the country, such as Lima and Arequipa, and into foreign markets.

Forest activities are more important in the department of Ucayali. Timber processing companies in this department account for 43% of the regional total and the new company registry shows that in the past few years 50% of all new companies are involved in timber processing activities.

Pucallpa, the capital of the Department of Ucayali, is the focal point for the products produced in the rural areas of the department. From Pucallpa, the products are distributed to the national market to meet the domestic demand, and there is also a timber processing industry mobilizing resources outside the department.

Ucayali's timber processing industry employs an average of 45% of the total working population. Its production includes mostly forest products which are usually exported. The main export markets are Mexico (30%), China (25.4%) and the United States (18.8%). It should be pointed out that Pucallpa-based companies export their forest products through Callao, the main export port of Peru.

In 2001, the regional GDP was 0.94% of the national GDP. Even though Ucayali has had significant growth at the national level, this ratio indicates that its contribution to the national GDP is still not significant. Madre de Dios' contribution to the GDP was 0.3% in the same year.

In the Department of Lima, 12% of economic activities in the district of Villa el Salvador are in the production sector. Its Industrial Park concentrates most of the district's production activities. The carpentry/joinery sector accounts for 30% of the Industrial Park and its product demand has shaped the general direction of the Park, which has a metropolitan-oriented area. Timber products manufactured in Villa el Salvador, such as flooring and doors, are sold in the US and Spain. Similarly, handcrafted furniture made here has started to be exported to the US and Ecuador. However, these opportunities are not being fully capitalized as these orders only account for 0.3% of total sales in the Industrial Park.

According to the 2007 Manufacturing Census, net sales of finished timber products in Lima, excluding furniture, amounted to 119 million soles, with approximately 2% of sales from micro enterprises, 82% from small enterprises and 16% from medium and large enterprises.

The construction sector, where timber is one of the main inputs, has reported a sustained growth. In June 2008, this sector increased by 16.4% from the previous year. This growth is a reflection of the dynamic housing, office, commercial and industrial building activity and of infrastructure development in the mining and energy sectors.

- 11 - WWF's CEDEFOR Project (2004) carried out a study on timber demand in Lima on the basis of the information provided by 48 timber companies and 3 public institutions involved in construction works. The study concluded that the main timber sources, in order of importance, were: Pucallpa, Loreto, Madre de Dios, Satipo and San Martin, and that the main timber products bought by these companies were dimension timber in commercial long, short and long narrow sizes and packaging.

As for the timber source, a significant percentage of the timber traded is either of unknown origin or illegal. However, over the past few years, efforts have been made and initiatives have been undertaken towards timber origin verification and certification. Currently, consumers are interested in buying timber of known origin, but the national market still does not financially compensate sellers and the industry incurs higher costs in obtaining this timber. However, timber of known origin or certified timber has better possibilities of penetrating the more demanding foreign markets.

Environmental aspects

The first forest concessions granted in Peru in 2002 were located in the Department of Madre de Dios. In total, 937 concessions were granted covering an area of 2,176,765 ha, with 2,522,141 ha being for permanent production forests. This is the department with the largest area of forest concessions for timber and non-timber production that are either certified or in the process of being certified.

Moist tropical forests in Madre de Dios cover almost the entire department and are characterized by a wide diversity of flora and fauna species, making this region an area of great biodiversity significance.

Mining is a major economic activity in this area. Madre de Dios has secondary alluvial gold deposits of fine-grained gold pebbles or layers. This activity has been carried out in a haphazard and illegal manner and is currently causing unprecedented environmental damage in the region.

The most important renewable and non-renewable natural resources in the Department of Ucayali are forest resources, energy resources (oil and gas), and a rich and extensive biodiversity resource base. The Department has 10 different types of forests, which account for approximately 85% of the total regional area. These forests have a great diversity of species with about 2,500 forest species, of which only 550 have been researched. At present, only 2% of this total is harvested. It is estimated that production forests in the region cover more than 8 million hectares, of which 4,089,926 ha have been designated as permanent production forests, while the remaining forests are included in native community territories, private properties and reserved areas.

Considerable progress has been made over the past decade in forest management, mainly through the use of management plans and by accessing forest resources through the forest concessions modality. However, some concessions have recently been reverted to the State due to the non-compliance of certain commitments made by concessionaires. The state of neglect that these concessions are usually left in leads to the re-conversion of these lands to agricultural use by local communities and also promotes illegal logging by some operators. Illegal forest activities not only represent a threat to the region's biodiversity but also to the Free Trade Agreement (FTA) currently in force between Peru and the United States. Thus, it is important to establish a mechanism to ensure that all timber marketed comes from managed forests, instead of simply monitoring timber consignments based on Forest Transport Waybills.

Illegal forest activities have a substantial negative impact on the environment. Therefore, sustainable forest management and the production and marketing of timber of verified origin will be strengthened in each project intervention area.

- 12 -

1.4 Expected outcomes at project completion

Upon completion, the project will have achieved the following outcomes benefitting native communities, concessionaires and other forest-based entrepreneurs:

 Business management, production economics, costs and planning.  Timber traceability system validated and equipped for each project beneficiary.  Technical personnel of enterprises, forest concessions and native communities trained in timber traceability systems.  Promotion and dissemination of certified timber and register of suppliers.

The project expects to obtain 10 undertakings, signed by public institutions, for the utilization of products from certified timber of verified origin.

At project completion, 15 community enterprises and SMEs will be marketing certified timber, which will be backed by a national forest certification system duly recognized by the market.

- 13 - PART 2. PROJECT RATIONALE AND OBJECTIVES

2.1 Rationale

2.1.1 Institutional set-up and organizational issues

The economic model developed by the Government stipulates regulatory, promotion and monitoring roles for the public sector, leaving the management of production, employment generation and the creation and distribution of wealth to the private sector.

Taking into account the profile of this project, the institutional set-up for its implementation will be made up of public and private institutions of the timber and export sectors as described below.

National Forestry Chamber -- CNF

The CNF was established in 1989 and it was officially recognized by the Ministry of Agriculture through Ministerial Resolution No. 00321-89-AG of 20 September 1989, as a private organization representing the timber sector before public institutions and agencies of the agricultural, industrial and export sectors. Its membership includes: the National Confederation of Micro and Small Enterprise Associations (Confederación Nacional de Gremios de la Micro y Pequeña Empresa -- CONAMYPE); Small and Medium Forest Producers and Industrialists Association of Peru (Asociación Forestal de Pequeños y Medianos Productores y Empresarios del Perú -- AFORPYME); Timber Producers Association of the Department of Ucayali (Asociación de Madereros del Departamento de Ucayali -- AMDU); Timber Logging and Reforestation Association of the Ucayali Region (Asociación de Extractores Madereros y Reforestadores de la Región de Ucayali -- AEMRU); Peruvian Environmental Network (Red Ambiental Peruana -- RAP); Association for Integrated Research and Development (Asociación para la Investigación y el Desarrollo Integral -- AIDER); Peruvian Foundation for the Conservation of Nature (Fundación Peruana para la Conservación de la Naturaleza -- PRO NATURALEZA); Peruvian Society of Engineers, Forest Engineering Chapter (Colegio de Ingenieros del Perú -- CIP, Capítulo de Ingeniería Forestal); Peruvian Association of Forest Engineers (Asociación Peruana de Ingenieros Forestales -- APIF); National Agrarian University of La Molina (Universidad Nacional Agraria La Molina -- UNALM); Civil Association for Forest Development (Asociación Civil para el Desarrollo Forestal -- FORESTAS); and AIDESEP Regional Organization, Ucayali -- ORAU.

The National Forestry Chamber will be the executing agency of this project. The CNF represents the private sector and serves as a platform for the interaction of its members and representative organizations of timber producers in the main regions of the project’s area of action. The role of the CNF, as a non-profit civil association, is consistent with its institutional objective of promoting the sustainable development of the forest sector, harmonizing conservation principles with scientific, technological and socioeconomic development. Its functions are:

 Promoting the sustainable use of forest resources, harmonizing the principles of conservation with technology and economic and social development.  Coordinating national forest activities, and acting as the main interlocutor of the private forest sector before public and private institutions and agencies.  Proposing and achieving efficient and sound forest policies to encourage forest management, industry, trade and the promotion of exports.  Building up and disseminating an adequate image of the forest activity at the national level consistent with the magnitude of the resource and its territorial significance.  Providing feedback/making statements on issues of national interest.

- 14 -  Designing and implementing research, training and development projects related to forestry.

General Forest and Wildlife Directorate (DGFFS)

The General Forest and Wildlife Directorate is responsible for proposing policies, strategies, regulations, plans, programs and national projects related to the sustainable harvesting of forest and wildlife resources and associated genetic resources in consonance with the National Environmental Policy and environmental regulations. Its functions include the development of proposals for policies, regulations, plans, programs, strategies and projects for the management, control, administration and promotion of the conservation and sustainable harvesting of forest and wildlife resources, as well as taking actions for the implementation of national and international agreements and commitments signed by Peru in the field of wild fauna and flora conservation and sustainable utilization in coordination with the foreign trade sector.

Association for Integrated Research and Development - AIDER

The Association for Integrated Research and Development (AIDER) is a non- governmental organization established in 1986. It is registered with the Registry of Associations of Lima and with the Peruvian International Cooperation Association (Agencia Peruana de Cooperación Internacional – APCI). Its mission is to contribute to the improvement of the quality of life of poor communities and environmental conservation through sustainable proposals based on applied research, political action, optimization of traditional knowledge, and establishment of synergies.

The Association has extensive experience in:

 Sustainable forest management: community forest management, combating desertification, voluntary forest certification under FSC standards as the forest stewardship agency for indigenous communities, community organization and organizational strengthening, timber and non-timber forest production, beekeeping, fish farming, and market articulation.  Restoration of degraded areas and reforestation: rehabilitation of lands, nursery production and plantation management.  Environmental services: carbon sequestration, clean energy, formulation of CDM and REDD projects, and biodiversity and landscape conservation.  Natural protected areas: implementation of administration contracts and production activities in buffer zones.

- 15 -

2.1.2 Stakeholder analysis

Stakeholder Problems, needs, Involvement in the Characteristics Potential groups interests project Primary stakeholders Primary beneficiary/stakeholder: Native community men and women who are directly involved in forest operations and make decisions about the management of their forests and the processing and Organizations marketing of their that originated from timber. They will tribal forest groups, Deficient technology participate in the made up of families and limited knowledge training provided by the linked by the about timber project on monitoring following main traceability. timber from the forest, Technical indigenous elements: language through processing and personnel interested in or dialect, cultural Very few tools transport, to the buyer. learning and applying and social available and poorly In addition, they will be timber traceability characteristics, trained personnel for involved in the systems. permanent and the traceability of management of their Native common use of a timber products. enterprises with the communities Some with certified given territory, and support of the project, forests. living in a central or Limited knowledge of thus improving their

dispersed cost-benefits involved understanding and Support from its regents. settlement. Men in the implementation share of the market.

and women who of a traceability system They will provide the Trust in the institutions are forest users, and of new project with but have limited opportunities for the infrastructure and infrastructure and marketing of certified manpower to implement installed capacity timber. the timber traceability for timber system. The project will traceability. promote the participation of native community women in the implementation of activities and in community production and social organizations so as to ensure further inclusion of women in community decision- making. Limited knowledge Concessionaires Primary Forest users who about timber interested in learning beneficiary/stakeholder: access resources traceability. about timber traceability. Forest concession through forest holders and their Forest concessions and Very few tools Availability of technical personnel are men and concessionaires who have available and poorly personnel for training. women who are infrastructure and trained personnel for involved in forest harvesting the traceability of Trust in the institutions operations and make capacity. timber products. decisions about forest Some with certified management and

- 16 - Stakeholder Problems, needs, Involvement in the Characteristics Potential groups interests project Limited knowledge of forests. timber processing and cost-benefits involved marketing. They will in the implementation participate in the of a traceability system training provided by the and of new project to implement opportunities for the and strengthen the marketing of certified monitoring of timber timber. from the forest, through processing and transport, to the buyer (local, national and/or export markets). In addition, they will be involved in the management of their enterprises with the support of the project, thus improving their understanding and share of the market. They will provide the project with infrastructure and manpower to implement the timber traceability system. Primary beneficiary/stakeholder: Companies whose timber supplies come from managed forests. They process the timber and market their products at the local, national and/or export Businessmen interested markets. Their in traceability systems for personnel are men and Company owners Inadequate technology timber products. women who make that invest funds in for the monitoring of decisions in their the forest sector, timber sales and Availability of respective enterprises. throughout the purchases. Forest infrastructure and They will participate in whole production industrialists technical personnel to be the training provided by chain. Traders of Poorly trained /entrepreneurs trained. the project to implement timber products, personnel. and strengthen the with infrastructure Some with certified chain monitoring of timber and capacity to Limited access to the of custody from the forest, through change. certified timber market. processing and Trust in the institutions transport, to the buyer (local, national and/or export markets). In addition, they will be involved in the management of their enterprises with the support of the project, thus improving their understanding and

- 17 - Stakeholder Problems, needs, Involvement in the Characteristics Potential groups interests project share of the market. They will provide the project with infrastructure and manpower to implement the timber traceability system. Secondary stakeholders Can participate in the Availability of forest implementation of professionals. certain activities: Insufficient technology Project monitoring and and limited resources to Infrastructure and control; organization of Public implement a monitoring Responsible for authority to control forest meetings between organizations system for timber the monitoring and resources. native communities and (DGFFS, product flows. administration of forest concessionaires; regional forest resources. A duty to comply with the dissemination of the governments) Personnel with limited legislation requirements acquired traceability training in timber on the monitoring and knowledge among traceability. control of the marketing public officers; of legal timber. dissemination of project outputs. Limited number of members who comply Secondary National with the requirements beneficiary/stakeholder: representative of of the certified timber ADEX will participate Proximity to the forest market. by promoting the export Private consumer market for entrepreneurs and of timber of verified Organizations certified timber. the main link with Limited access to origin from managed (ADEX) the markets for timber certification and forests. It will also Trust in the institutions certified timber. traceability systems participate in the that would demonstrate organization of the legal origin of outreach events. timber products. Direct participation in project activities to strengthen the capacity of men and women from native communities. AIDER will participate in the project by Recognized supporting the representatives Aware of the importance development and Development and administrators Insufficient technical of monitoring timber implementation of the NGOs (Native of forest and financial resources flows. timber traceability Community management to develop a timber system of the native Regents) activities in the monitoring system. Technical personnel communities that native available. maintain their forest communities. certification under the Regency System. AIDER personnel will participate in training activities, organizing courses-workshops and providing technical assistance to native

- 18 - Stakeholder Problems, needs, Involvement in the Characteristics Potential groups interests project communities on timber traceability, production processes and business management. AIDER will coordinate with the executing agency on an ongoing basis for the implementation of project activities and provision of support during the organization of courses and other training and outreach events. Tertiary stakeholders Could contribute to project objectives. Public Public institutions Limited technological Supervisory, These organizations organizations involved in the resources to promote development and will provide thematic (OSINFOR, development of timber product research authority with experts for the PRODUCE, sustainable forest monitoring influence in society implementation of UNALM) management training courses and other outreach events.

Project beneficiaries

The following table contains a list of the beneficiaries who will participate in project activities:

No. Beneficiary Departament 1 EMFORPORTILLO SRL Madre de Dios 2 Maderas Cocama EIRL Madre de Dios 3 Aserradero Espinoza SA Madre de Dios 4 Consolidado Otorongo Madre de Dios 5 Consolidado Chullachaqui Madre de Dios 6 Agroindustrial Victoria SAC Madre de Dios 7 MADERYJA Madre de Dios 8 Catahua SAC Madre de Dios 9 Maderera Tawari SRL Madre de Dios 10 Bélgica Native Community Madre de Dios 11 REFOREST SA Ucayali 12 Horacio Pipo Ucayali 13 Jorge Eduardo Acosta Zárate Ucayali 14 Von Humboldt Forest SAC Ucayali 15 Consorcio Forestal Amazónico Ucayali 16 Forestal Nieto SAC Ucayali 17 Comunidad Nativa Curiaca Ucayali 18 Callería Native Community Ucayali 19 Pueblo Nuevo Native Community Ucayali

- 19 -

2.1.3 Problem analysis

Poor Limited access to the Limited confidence in that the Limited development of the domestic international exclusive markets for timber comes from managed market for certified forest products certified forest products forests High level of illegality in forest production activities

Limited capacity of small and medium forest enterprises to ensure on a sustainable basis that the timber traded is of legal origin and is sourced from forest concessions and native community forests under management

Limited development of Limited capacities of technical Weak management of small and monitoring and control systems personnel for monitoring and medium forest enterprises for timber products throughout the control to incorporate timber value chain thus making it difficult traceability into their processes for forest SMEs to verify the legal origin of the timber they market

Limited supply of training courses Limited knowledge of business Inflexible monitoring systems that management tools are difficult to implement in accordance with the changing needs of enterprises

Limited dissemination and Limited supply of technical Limited business management and recognition of timber monitoring assistance on timber monitoring negotiation capacity for the and control systems through the and control marketing of certified products value chain

Limited awareness on forest traceability and certification initiatives

Traceability is a series of interrelated technical and operational procedures that allows all products to be registered from the place of origin or source of the raw materials, through their processing, transport and up to their final point of sale. This can benefit forest concessions (producers) and timber companies (processors) by giving credibility and legality to their products in the market (consumers) and providing an efficient timber monitoring and administration system for the forest authority.

This is feasible when there is a well-developed market and production chain in place. The Peruvian forest sector has made significant progress in many aspects, but there is still very little information available about traceability. The main problem that has been identified that is hampering the

- 20 - development of a traceability system and eventually a system of certification of origin, is the limited capacity of small and medium forest entrepreneurs to prove that the timber they are trading has been legally obtained and sourced from managed forests in forest concessions and native community forests. Because of this weakness, the country has not yet developed a market for certified products and entrepreneurs have difficulty penetrating international markets with this type of requirements. Similarly, they have difficulty ensuring the legal origin of timber on a sustainable basis, which leads to a high level of informality in the forest sector through the production chain.

One of the main causes of the problem is the poor monitoring of timber products through the value chain from the point of origin to the end consumer. This makes it difficult for the SMEs to verify the legal origin of the timber they market.

Another reason is the limited capacity and knowledge of monitoring and control technical personnel to implement timber traceability throughout the timber production chain. In this respect, the personnel is affected by the limited availability of courses and workshops and technical assistance and the lack of awareness about successful initiatives and case studies on traceability and forest certification.

Weak business management capacity is another reason why forest SMEs cannot implement traceability systems. Their limited knowledge about matters related to business administration, marketing, strategic planning and marketing of certified products does not allow them to adequately incorporate a traceability system.

- 21 - 2.1.4 Logical Framework Matrix

PROJECT ELEMENTS INDICATORS MEANS OF VERIFICATION SUPUESTOS Development objective: Contribute to increasing the trade in  Five years after project completion the volume of  Reports from SUNAD and Compliance with the laws and timber of legal origin sourced from certified timber exported, originating from forest ADEX on timber exports. international agreements sustainably managed forests of concessions and native communities, has  Reports from the competent regarding the legal origin of native communities and forest increased fivefold. forest authority. timber concessions in the Peruvian  10 central and regional government institutions use  Reports from public Amazon Region. timber with certification of origin in their public institutions. works programs.  Interviews  20 SMEs demand certified timber.  One timber operational origin certification management unit. Specific objective: Strengthen the traceability capacity  10 undertakings signed by public and private  Project reports Public and private institutions of small and medium forest institutions for the utilization of certified timber  Company reports are committed to the enterprises to ensure on a products.  Reports from the General promotion of legally sourced sustainable basis that the timber  15 community enterprises and SMEs are marketing Forest and Wildlife timber processed and traded is of legal certified timber. Directorate (DGFFS) origin and is sourced from forest  150 people, including professionals, indigenous  Forest certificates Public and private institutions concessions and native community technical staff, concessionaires and civil servants,  Reports from training are committed to supporting a forests under management.. among others, have been trained in timber workshops national timber monitoring and traceability, forest certification and chain of custody  Certification systems control system systems. implemented by timber  A national forest certification system recognized by companies. the market after project completion.  Photographic images  10 community enterprises and SMEs have established the traceability system developed by the project.

- 22 - PROJECT ELEMENTS INDICATORS MEANS OF VERIFICATION SUPUESTOS Output 1: Forest SMEs have adopted a  A traceability system developed and validated in  Traceability software Native communities and forest timber traceability system and are the first year of project implementation.  Reports about the traceability entrepreneurs have the basic marketing certified timber  5 native communities implementing and supporting system infrastructure to implement a a timber product traceability system by the second  Proof of software installation timber traceability system year of the project in timber companies  10 forest enterprises implementing and applying  Company evaluation sheets Native communities and forest the traceability of timber products by year 2 of  Register of certified suppliers entrepreneurs have the project implementation.  Event reports minimum staffing levels to  A dynamic traceability system operating in  Timber product price manage the timber traceability community enterprises and SMEs by year 2 of schedule system project implementation.  An on-line directory of certified timber suppliers.  12 information dissemination events on traceability, forest certification and chain of custody.  A quarterly publication on timber product prices. Output 2: The technical personnel of forest  6 training workshops on traceability, forest  Event reports and minutes Entrepreneurs name an area- SMEs have developed the capacity certification and chain of custody  Technical assistance sheets officer responsible for required for adequate timber  15 community enterprises and SMEs provided with traceability issues monitoring and control in production technical assistance in timber traceability and marketing processes  4 field visits for the exchange of experiences in incorporating timber traceability timber traceability and certification Output 3: Forest companies' business  8 training workshops on business management  Training workshop reports Forest entrepreneurs management capacity strengthened tools  Strategic plans document interested in using the  15 community enterprises and SMEs with strategic appropriate tools to improve management plans developed their businesses

- 23 - 2.2 Objectives Tree

IncreasedObjetivo access to Confidence in that the timber Fully developed domestic international markets for comes from managed forests market for certified forest certified forest products Higher legality levels in forest products production activities

Traceability capacity of small and medium forest enterprises strengthened to ensure on a sustainable basis that the timber processed and traded is of legal origin and is sourced from forest concessions and native community forests under management.

Forest SMEs have adopted a The technical personnel of The business management timber traceability system and forest SMEs have developed capacity of forest enterprises are marketing certified timber the capacity required for has been strengthened adequate timber monitoring and control in production and marketing processes

incorporating timber traceability Training courses-workshops on

business management have

A timber traceability system for been developed timber from managed forests has been developed and Timber product monitoring and validated control training workshops have been developed

The timber traceability system Ongoing technical assistance and the marketing of certified provided to community timber have been promoted enterprises and SMEs to Technical assistance in timber traceability has been provided strengthen their certified timber management capacity to enterprises and native communities

The sharing of experiences on

timber certification and

traceability has been promoted

among entrepreneurs, forest

concessionaires, native

communities, professionals,

civil servants and other forest

sector stakeholders

- 24 -

2.2.1 Development objective and impact indicators

Contribute to the formalization of forest activities by strengthening the trade in timber of legal origin sourced from sustainably managed forests of native communities and forest concessions in the Peruvian Amazon Region.

Indicators:

 Five years after project completion the volume of certified timber exported, originating from forest concessions and native communities, has increased fivefold.  10 central and regional government institutions use timber with certification of origin in their public works programs.  20 SMEs demand certified timber.  One operational timber origin certification management unit.

2.2.2 Specific objective and outcome indicators

Strengthen the traceability capacity of small and medium forest enterprises to ensure on a sustainable basis that the timber processed and traded is of legal origin and is sourced from forest concessions and native community forests under management.

Indicators:

 10 undertakings signed by public and private institutions for the utilization of certified timber products.  15 community enterprises and SMEs are marketing certified timber.  150 people, including professionals, indigenous technical staff, concessionaires and civil servants, among others, have been trained in timber traceability, forest certification and chain of custody systems.  A national forest certification system recognized by the market after project completion.  10 community enterprises and SMEs have established the traceability system developed by the project.

- 25 - PART 3. DESCRIPTION OF PROJECT INTERVENTIONS

3.1 Outputs and Activities

3.3.1 Outputs

Output 1: Forest SMEs have adopted a timber traceability system and are marketing certified timber..

Indicators:  A traceability system developed and validated in the first year of project implementation.  5 native communities implementing and supporting a timber product traceability system by the second year of the project  10 forest enterprises implementing and applying the traceability of timber products by year 2 of project implementation.  A dynamic traceability system operating in community enterprises and SMEs by year 2 of project implementation.  An on-line directory of certified timber suppliers.  12 information dissemination events on traceability, forest certification and chain of custody.

Output 2: The technical personnel of forest SMEs have developed the capacity required for adequate timber monitoring and control in production and marketing processes incorporating timber traceability.

Indicators:  6 training workshops on traceability, forest certification and chain of custody  15 community enterprises and SMEs provided with technical assistance in timber traceability  4 field visits for the exchange of experiences in timber traceability and certification

Output 3: Forest companies' business management capacity strengthened

Indicators:  Training workshops on business management tools  15 community enterprises and SMEs with strategic management plans developed

3.3.2 Activities

Activity 1.1: Design, develop and validate a traceability system

The traceability expert will be responsible for designing and developing a timber traceability system. To this end, he/she will have the support of concessionaires and native communities to assist in the analysis of individual production processes and adjust the system to the largest possible number of cases. Two concessionaires and two communities will be selected for the review of production systems as the basis for the design, which will also incorporate the experience gained by the National Forestry Chamber during the implementation of Project PD 421 (F) on Timber Production Chains. Forms will also be designed for the collection of field data in the various stages of the production process, to be later fed into the software.

The technical team led by the traceability expert will develop the traceability software according to the production flows of each company to ensure adequate information management and accessibility for project beneficiaries. Once developed, this software will be installed and tested.

- 26 - Activity 1.2: Promote the traceability system and the marketing of certified timber

From the second semester onwards and throughout the project implementation period, the marketing of certified timber will be encouraged and promoted through 12 events and the development of dissemination material such as newsletters and brochures, which will be distributed to a target audience of selected enterpreneurs and public agency representatives, so that both the State and private sector will demand certified timber as a guarantee of quality in their large timber purchases.

Activity 2.1: Develop training workshops on timber product monitoring and control

Six (6) workshops will be developed for the training of human resources in forest concessions and native communities so as to ensure the adoption and implementation of the system in daily production operations.

The topics to be addressed during these workshops are:

 Traceability  Forest certification  Chain of custody

Activity 2.2: Provide technical assistance on timber traceability to community enterprises and SMEs

Specialized technical assistance and advice will be provided to interested enterprises on forest certification, chain of custody and business management. The purpose of the technical assistance to be provided will be to enable the companies to obtain and/or maintain their voluntary forest certification by providing facilities and responding to technical enquiries so as to ensure compliance with established certification standards.

Activity 2.3: Promote the sharing of experiences on timber certification and traceability among entrepreneurs, forest concessionaires, native communities, professionals, civil servants and other forest sector stakeholders

Concessionaires and representatives of Madre de Dios and Ucayali native communities will carry out field visits to the regions of Ucayali, Madre de Dios, Arequipa and Lima, in order to disseminate successful experiences of both enterprises and concessions to raise awareness on the benefits of timber certification and traceability in production and marketing.

Activity 3.1: Develop training workshops on business management tools

Capacity-building activities will be conducted by specialized project professionals so as to improve the management of forest concessions. To this end, 8 training workshops will be implemented. The topics to be addressed are:

 Strategic planning  Marketing strategies  Production cost analysis  Administration

Activity 3.2: Provide ongoing technical assistance to community enterprises and SMEs in order to strengthen their certified timber marketing capacities

Project specialists will provide technical assistance to SMEs and native communities through ongoing support to assist in business management actions such as planning, administration, accounting, marketing, financing and others, in order to strengthen the business management capacity of forest enterprise managers and executives.

The following table shows the inputs required for each of the above activities.

- 27 -

ACTIVITIES INPUTS Activity 1.1 Design, develop and validate a traceability 20 10 Fares - air travel system 100 40 Days – DSA 12 6 Months - local transport 20 Days – boat rental 160 100 Gallons – fuel and lubricants 30 Days- driver 12 6 Months – office supplies 8 6 Consultants – systems analyst 1 Unit – Software license 1 Unit - laptop 70 30 Days – truck rental 11 6 M/M – forest technician 8 Months – Information gathering services 11 6 months – data entry services 15 Unit – Database software license Activity 1.2 Promote the traceability system and the 10 Fares – air travel marketing of certified timber 40 Days – DSA 315 M/D – participants in events 12 Events – logistical services 360 Servings – refreshments 12 Events – rental of premises 360 Units – folder with office supplies and photocopies 12 Events – facilitator 12 Events – speaker 28 Days – truck rental 21 Months - local transport 21 Days – boat rental 420 Gallons – fuel and lubricants 12 Days- service of driver 24 Months – office supplies 1 Unit – photo camera 1 Subcontract – editing and printing services of 2000 leaflets 1 Subcontract – editing and printing services of 2000 newsletters 1 Subcontract – editing and publishing a compendium of project experiences 10 Months – webpage updating services 21 Months – spare parts computer equipment 1 Unit – multimedia projector 1 Unit – screen

- 28 - ACTIVITIES INPUTS Activity 2.1: Develop training workshops on timber 10 Fares – air travel product monitoring and control 30 Days – DSA 120 M/D – course participants 6 Courses – logistical services 360 Servings – refreshments 6 Courses – rental of premises 120 Units – folder with office supplies and photocopies 6 Courses – facilitator 1 Unit – multimedia projector 1 Unit – screen Activity 2.2 Provide technical assistance on timber 10 M/M – specialized technician traceability to community enterprises and 10 Fares – air travel SMEs 50 Days – DSA 15 Months - local transport 15 Months – office supplies 2 Units – GPS equipment 6 M/M - forest technician 4 Months – Information gathering services 15 Units - laptop 6 Months – data entry services Activity 2.3 Promote the sharing of experiences on 30 Fares – air travel timber certification and traceability among 90 Days – DSA entrepreneurs, forest concessionaires, 64 Units – folder with office supplies and photocopies native communities, professionals, civil 64 M/M – participants in field visits servants and other forest sector 12 Months - local transport stakeholders. 5 M/M - forest technician 4 Months – information gathering services 6 Months – data entry services

Activity 3.1 12 Fares – air travel Develop training workshops on business 36 Days – DSA management tools. 160 M/D – course participants 8 Courses – logistical services 480 Servings – refreshments 8 Courses – rental of premises 160 Units – folder with office supplies and photocopies 8 Courses – facilitator Activity 3.2 Provide ongoing technical assistance to 10 M/M – specialized technician community enterprises and SMEs in order 15 Months - local transport to strengthen their certified timber 12 Months – office supplies marketing capacities. 3 M/M - forest technician 3 Months – information gathering services 3 Months – data entry services

- 29 - ACTIVITIES INPUTS Activity 3.3 Establish and maintain project coordination. 40 Ticket – Air travel 50 M/D – Consultative Committee members 200 Day – DSA 3 Report - Auditing 24 M/M – Technical assistant 27 M/M – AIDER Coordinator 27 M/M – CNF Coordinator 27 M/M – Project Director 24 M/M – Traceability Specialist 27 M/M – Monitoring Officer 48 M/M – Area Coordinator 27 Month – Office rental 25 Month – Computer equipment spare parts/refills 25 Month – Equipment maintenance and repairs 27 Month - Utilities 3 Meeting – Refreshments /Steering Committee 5 Meeting – Refreshments /Consultative Committee 5 Meeting – Refreshments /Coordination and monitoring 6 Unit – Computer equipment

- 30 -

3.2 Implementation approaches and methods

The project will be executed in close coordination with the native communities and SMEs. In relation to the native communities, project activities will be implemented within the framework of the AIDER Regency scheme and will be based on the management guidelines established in its regulations, including the decision making process, calls for work meetings and monitoring compliance with FSC standards, among others. In the case of the SMEs, activities will be implemented within the framework of the guidelines of their respective trade associations.

The project seeks to contribute to an increase in the legal trade of timber through a traceability system that will facilitate the implementation of a timber certification scheme. To this end, the project will strengthen business and technical capacities so as to develop the required skills for the supervision of all stages of forest operations, regardless of who will be implementing them.

The project will be implemented in accordance with the following strategies:

(i) develop the capacity of men and women from the native communities in technical and social-business aspects: forest management is a social process that involves not only the learning of new skills, but also behavioral changes and the development of business management skills, which represents a real challenge for indigenous peoples who are, in the majority of cases, distanced from their traditional lifestyles. In view of this, the “learning-by-doing” training strategy is vital and is a cross-cutting component of all project activities.

To this end, the project will run training workshops to improve the production and business management skills of beneficiaries. The topics to be covered will include: traceability, certification, chain of custody, strategic planning, production cost analysis and administration aspects.

(ii) optimize the partnerships established between native communities and forest harvesting companies: given the fact that native communities require the participation of forest-based companies to take full advantage of the supply of environmental goods and services of their forests, it is important to promote this type of agreements, strengthening the concept of “partnerships for conservation”.

(iii) plan and organize a cooperative production and marketing strategy: in view of the fact that one of the main limitations is the low capacity to satisfy commercial orders in terms of available volumes, it is imperative to establish a strategy to ensure the continued availability of timber; cooperative style production and sales would respond to this need.

(iv) formalize sustainable forest enterprises: as this is a commercial type initiative, it must comply with the regulations currently in force, which is also a vital requirement to demonstrate transparency.

(v) support market access: the consortium will be linked to certified timber markets in order to establish sound, medium and long term trade agreements, which will ensure the ongoing sale of timber, thus providing a permanent source of income throughout the year.

- 31 - 3.3 Work Plan

Schedule (in months) Outputs & Activities Responsible Party 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3

Output 1: Forest SMEs have adopted a timber traceability system and are marketing certified timber. Traceability 1.1. Design, develop and validate a traceability system Specialist 1.2. Promote the traceability system and the marketing of certified timber Director

Output 2: The technical personnel of forest SMEs have developed the capacity required for adequate timber monitoring and control in production and marketing processes incorporating timber traceability. Area Coordinator 2.1. Develop training workshops on timber product monitoring and control 2.2. Provide technical assistance on timber traceability to community Area Coordinator enterprises and SMEs 2.3. Promote the sharing of experiences on timber certification and traceability among entrepreneurs, forest concessionaires, native Director communities, professionals, civil servants and other forest sector stakeholders Output 3: Forest companies' business management capacity strengthened 3.1. Develop training workshops on business management tools Area Coordinator

3.2. Provide ongoing technical assistance to community enterprises and Area Coordinator SMEs in order to strengthen their certified timber marketing capacities. 3.3. Establish and maintain project coordination Director

- 32 - 3.4 Budget 3.4.1 Consolidated budget by component Budget components Inputs Unit cost TOTAL YEAR 1 YEAR 2 YEAR 3 10 Project personnel 11. National experts (long term) 11.1. Project Director 27 2,600 70,200 31,200 31,200 7,800 11.2. CNF Coordinator 27 900 24,300 10,800 10,800 2,700 11.3. AIDER Coordinator 27 900 24,300 10,800 10,800 2,700 11.4. Traceability Specialist 24 1,200 28,800 14,400 14,400 - 11.5. Area Coordinator 48 900 43,200 18,900 21,600 2,700 11.6. Monitoring Officer 27 900 24,300 10,800 10,800 2,700 12. Other labour 12.1. Technical Assistant 24 900 21,600 8,100 10,800 2,700 12.2. Specialized Technician 40 650 26,000 3,000 18,300 4,700 12.3. Participants in events 754 30 22,960 5,000 14,880 3,080 13. National consultants (short term) 13.1. Systems Specialist 6 2,000 12,000 12,000 - - 19. Component Total 1,004 296 297,660 125,000 143,580 29,080 20 Sub-contracts 21. Sub-contract (Project systematization) 1 3,500 3,500 - 3,500 - 22. Sub-contract (Leaflets) 1 600 600 - 600 - 23. Sub-contract (Newsletters) 1 2,200 2,200 - 2,200 - 24. Sub-contract (Event speaker) 12 100 1,200 300 600 300 25. Sub-contract (Event facilitator) 12 50 600 150 300 150 26. Sub-contract (Course facilitator) 14 500 7,000 2,000 5,000 - 29. Component Total 41 368 15,100 2,450 12,200 450 30 Travel 31. DSA 31.1. National Expert(s) /Consultant(s) 486 40 19,440 6,200 9,680 3,560 33. Local transport costs 33.1. National Expert(s) /Consultant(s) 191 158 30,240 7,920 16,200 6,120 33.2. International Consultant(s) 33.3. Others 1,159 9 10,280 5,260 4,240 780 39. Component Total 1,836 33 59,960 19,380 30,120 10,460 40 Capital Items 41. Office rental 27 1,400 37,800 16,800 16,800 4,200 44. Capital equipment 44.1. Computer equipment 38 728 27,650 12,650 15,000 - 44.2. Forestry equipment 2 500 1,000 - 1,000 - 44.3. Others 5 380 1,900 1,100 800 - 49. Component Total 72 949 68,350 30,550 33,600 4,200 50 Consumable items 52. Spares 46 60 2,760 960 1,440 360 53. Utilities 27 500 13,500 6,000 6,000 1,500 54. Office supplies 761 5 3,928 580 2,984 364 59. Component Total 834 24 20,188 7,540 10,424 2,224 60 Miscellaneous 61. Sundry 1,382 19 25,840 8,110 14,620 3,110 62. Auditing 3 1,200 3,600 1,200 1,200 1,200 69. Component Total 1,385 21 29,440 9,310 15,820 4,310 70 National management costs 71. Executing agency management costs 49,070 19,423 24,575 5,073 72. Contact point monitoring 24,535 9,712 12,287 2,536 79. Component Total 73,605 29,135 36,862 7,609 SUBTOTAL 564,303 223,364 282,606 58,333 80 Project monitoring and administration 81. ITTO monitoring and review 25,000 25,000 82. ITTO mid-term, final, ex-post evaluation 12,000 12,000 83. ITTO program support costs 25,854 12,124 11,703 2,028 89. Component Total 62,854 49,124 11,703 2,028 90 Refund of pre-project costs 100 GRAND TOTAL 627,157

- 33 - Consolidated yearly project budget – ITTO (US$)

Budget components Inputs Unit cost TOTAL YEAR 1 YEAR 2 YEAR 3 10 Project personnel 11. National experts (long term) 11.1. Project Director 27 2,600 70,200 31,200 31,200 7,800 11.2. CNF Coordinator 11.3. AIDER Coordinator 11.4. Traceability Specialist 24 1,200 28,800 14,400 14,400 - 11.5. Area Coordinator 48 900 43,200 18,900 21,600 2,700 11.6. Monitoring Officer 12. Other labour 12.1. Technical Assistant 12.2. Specialized Technician 10 800 8,000 - 6,400 1,600 12.3. Participants in events 13. National consultants (short term) 13.1. Systems Specialist 6 2,000 12,000 12,000 - - 19. Component Total 115 1,410 162,200 76,500 73,600 12,100 20 Sub-contracts 21. Sub-contract (Project systematization) 1 3,500 3,500 - 3,500 - 22. Sub-contract (Leaflets) 1 600 600 - 600 - 23. Sub-contract (Newsletters) 1 2,200 2,200 - 2,200 - 24. Sub-contract (Event speaker) 25. Sub-contract (Event facilitator) 26. Sub-contract (Course facilitator) 14 500 7,000 2,000 5,000 - 29. Component Total 17 782 13,300 2,000 11,300 - 30 Travel 31. DSA 31.1. National Expert(s) /Consultant(s) 371 40 14,840 5,200 7,080 2,560 33. Local transport costs 33.1. National Expert(s) /Consultant(s) 160 161 25,740 6,660 13,860 5,220 33.2. International Consultant(s) 33.3. Others 1,091 7 7,160 3,260 3,120 780 39. Component Total 1,622 29 47,740 15,120 24,060 8,560 40 Capital Items 41. Office rental 44. Capital equipment 44.1. Computer equipment 32 677 21,650 6,650 15,000 - 44.2. Forestry equipment 44.3. Others 1 600 600 - 600 - 49. Component Total 33 674 22,250 6,650 15,600 - 50 Consumable items 52. Spares 46 60 2,760 960 1,440 360 53. Utilities 27 500 13,500 6,000 6,000 1,500 54. Office supplies 746 4 3,328 460 2,504 364 59. Component Total 819 24 19,588 7,420 9,944 2,224 60 Miscellaneous 61. Sundry 1,315 16 21,100 6,860 11,780 2,460 62. Auditing 69. Component Total 1,315 16 21,100 6,860 11,780 2,460 SUBTOTAL 286,178 114,550 146,284 25,344 80 Project monitoring and administration 81. ITTO monitoring and review 25,000 25,000 82. ITTO mid-term, final, ex-post evaluation 12,000 12,000 83. ITTO program support costs 25,854 12,124 11,703 2,028 89. Component Total 62,854 49,124 11,703 2,028 100 GRAND TOTAL 349,032

- 34 - Consolidated yearly project budget – Executing Agency (US$)

Budget components Inputs Unit TOTAL YEAR 1 YEAR 2 YEAR 3 cost 10 Project personnel 11. National experts (long term) 11.1. Project Director 11.2. CNF Coordinator 27 900 24,300 10,800 10,800 2,700 11.3. AIDER Coordinator 27 900 24,300 10,800 10,800 2,700 11.4. Traceability Specialist 11.5. Area Coordinator 11.6. Monitoring Officer 27 900 24,300 10,800 10,800 2,700 12. Other labour 12.1. Technical Assistant 24 900 21,600 8,100 10,800 2,700 12.2. Specialized Technician 30 600 18,000 3,000 11,900 3,100 12.3. Participants in events 754 30 22,960 5,000 14,880 3,080 13. National consultants (short term) 13.1. Systems Specialist 19. Component Total 889 152 135,460 48,500 69,980 16,980 20 Sub-contracts 21. Sub-contract (Project systematization) 22. Sub-contract (Leaflets) 23. Sub-contract (Newsletters) 24. Sub-contract (Event speaker) 12 100 1,200 300 600 300 25. Sub-contract (Event facilitator) 12 50 600 150 300 150 26. Sub-contract (Course facilitator) 29. Component Total 24 75 1,800 450 900 450 30 Travel 31. DSA 31.1. National Expert(s) /Consultant(s) 115 40 4,600 1,000 2,600 1,000 33. Local transport costs 33.1. National Expert(s) /Consultant(s) 31 145 4,500 1,260 2,340 900 33.2. International Consultant(s) 33.3. Others 68 46 3,120 2,000 1,120 - 39. Component Total 214 57 12,220 4,260 6,060 1,900 40 Capital Items 41. Office rental 27 1,400 37,800 16,800 16,800 4,200 44. Capital equipment 44.1. Computer equipment 6 1,000 6,000 6,000 -- 44.2. Forestry equipment 2 500 1,000 - 1,000 - 44.3. Others 4 325 1,300 1,100 200 - 49. Component Total 39 1,182 46,100 23,900 18,000 4,200 50 Consumable items 52. Spares 53. Utilities 54. Office supplies 15 40 600 120 480 - 59. Component Total 15 40 600 120 480 - 60 Miscellaneous 61. Sundry 67 71 4,740 1,250 2,840 650 62. Auditing 3 1,200 3,600 1,200 1,200 1,200 69. Component Total 70 119 8,340 2,450 4,040 1,850 70 National management costs 71. Executing agency management costs 49,070 19,423 24,575 5,073 72. Contact point monitoring 24,535 9,712 12,287 2,536 79. Component Total 73,605 29,135 36,862 7,609 SUBTOTAL 278,125 108,815 136,322 32,989 100 GRAND TOTAL 278,125

- 35 -

3.4.2 ITTO budget by component

Yearly project budget by source - ITTO (US$) Annual disbursements Total Year 1 Year 2 Year 3 Budget components 10. Project personnel 162,200 76,500 73,600 12,100 20. Sub-contracts 13,300 2,000 11,300 - 30. Duty travel 47,740 15,120 24,060 8,560 40. Capital Items 22,250 6,650 15,600 - 50. Consumable items 19,588 7,420 9,944 2,224 60. Miscellaneous 21,100 6,860 11,780 2,460 Subtotal 1 286,178 114,550 146,284 25,344 80. Project monitoring and administration 81. Monitoring and review 25,000 82. Evaluation costs 12,000 Subtotal 2 323,178 83. Program support costs (8% of total budget) 25,854 84. Donor monitoring costs 90. Refund of pre-project costs ITTO TOTAL 349,032

3.4.3 Executing agency budget by component

Yearly project budget by source -- Executing agency (US$) Annual disbursements Total Year 1 Year 2 Year 3 Budget components 10. Project personnel 135,460 48,500 69,980 16,980 20. Sub-contracts 1,800 450 900 450 30. Duty travel 12,220 4,260 6,060 1,900 40. Capital Items 46,100 23,900 18,000 4,200 50. Consumable items 600 120 480 - 60. Miscellaneous 8,340 2,450 4,040 1,850 70. Executing agency management costs 73,605 29,135 36,862 7,609 EXECUTING AGENCY TOTAL 278,125 108,815 136,322 32,989

- 36 - 3.4.4 Budget by activity and component (US$)

10. Project 20. Sub- 40. Capital 50. Consumable 60. OUTPUTS / ACTIVITIES + personnel contracts 30. Duty travel Items items Miscellaneous YEAR Total Output 1: Forest SMEs have adopted a timber traceability system and are marketing certified timber. 12,000 I 4,860 I 6,650 I 120 I 5,600 I 29,230 I 1 1.1. Design, develop and validate a traceability system 3,000 E 2,360 E - E 120 E - E 5,480 E 1.2. Promote the traceability system and the marketing - I 6,300 I 9,280 I - I 2,940 I 1,920 I 20,440 I 1, 2, 3 of certified timber 7,200 E 1,800 E 1,120 E 1,100 E - E 2,040 E 13,260 E 12,000 I 6,300 I 14,140 I 6,650 I 3,060 I 7,520 I 49,670 I Sub-total - Output 1: 10,200 E 1,800 E 3,480 E 1,100 E 120 E 2,040 E 18,740 E Output 2: The technical personnel of forest SMEs have developed the capacity required for adequate timber monitoring and control in production and marketing processes incorporating timber traceability. 2.1. Develop training workshops on timber product - I 3,000 I 3,000 I 600 I 240 I 720 I 7,560 I monitoring and control 2 4,800 E - E - E 200 E - E 900 E 5,900 E 2.2. Provide technical assistance on timber traceability 8,000 I 1,800 I 15,000 I 600 I 3,400 I 28,800 I to community enterprises and SMEs 2, 3 3,000 E 3,800 E 1,000 E - E - E 7,800 E 2.3. Promote the sharing of experiences on timber - I 10,440 I 128 I 3,400 I 13,968 I certification and traceability among entrepreneurs, forest 2, 3 concessionaires, native communities, professionals, civil servants and other forest sector stakeholders 5,060 E - E - E - E 5,060 E 8,000 I 3,000 I 15,240 I 15,600 I 968 I 7,520 I 50,328 I Sub-total - Output 2 12,860 E - E 3,800 E 1,200 E - E 900 E 18,760 E Output 3: Forest companies' business management capacity strengthened 3.1. Develop training workshops on business - I 4,000 I 3,600 I 560 I 960 I 9,120 I 1, 2 management tools 6,400 E - E - E - E 1,200 E 7,600 E 3.2. Provide ongoing technical assistance to community - I 1,800 I - I 2,100 I 3,900 I enterprises and SMEs in order to strengthen their 2, 3 certified timber marketing capacities. 9,500 E - E 480 E - E 9,980 E 142,200 I 12,960 I - I 15,000 I 3,000 I 173,160 I 3.3. Establish and maintain project coordination 1, 2, 3 96,500 E 4,940 E 43,800 E - E 4,200 E 149,440 E 142,200 I 4,000 I 18,360 I - I 15,560 I 6,060 I 186,180 I Sub-total - Output 3 112,400 E - E 4,940 E 43,800 E 480 E 5,400 E 167,020 E Total (I) 162,200 I 13,300 I 47,740 I 22,250 I 19,588 I 21,100 I 286,178 I Total (E) 135,460 E 1,800 E 12,220 E 46,100 E 600 E 8,340 E 204,520 E TOTAL 297,660 15,100 59,960 68,350 20,188 29,440 490,698

- 37 - 3.5 Assumptions, risks and sustainability

3.5.1 Assumptions and risks

The main assumptions that will guarantee the success of this project are as follows: macroeconomic and social policies in the country are maintained; there is stability in forest policy; the predisposition and willingness of forest concessionaires, native communities and businessmen to actively participate in the project is maintained and they are willing to accept changes; the forest concessions system is continued; companies and public institutions are willing to share information in a timely manner; the international market becomes more demanding and asks that timber be certified for forest management and chain-of-custody; the project is an important tool in support of the fight against illegal logging and trade undertaken by the Government, which the new government administration will most surely continue to support and strengthen.

One of the main risks for the implementation of the project would be that the Government stops promoting sustainable forest management, which would contravene the provisions of the current national forestry legislation. In order to counteract this possibility, the CNF will actively participate in different fora, together with civil society organizations, to advocate and call upon government representatives to promote awareness and implement actions aimed at combating illegal forest activities. The Forest Dialogue and Consensus-Building Roundtable is an important mechanism through which society informs the authorities about problems in the forest sector, especially in relation to illegal timber logging and trade activities. Furthermore, the forest dialogues organized by the CNF with the cooperation of other institutions in the National Congress of the Republic represent another forum to present, discuss and submit proposals.

In relation to the development objective, the most serious risk would be a disturbance of the commercial stability that currently exists in the country for timber products. The financial crisis in the United States of America has already hit bottom and the country is now on the road back to recovery. Furthermore, the Chinese market is still strong and Europe is taking the required measures to avoid falling into a crisis situation, so the above risk situation seems highly unlikely. It is important to stress that the Peruvian forest products sector has been diversifying its foreign markets, and that if a significant downturn were to occur in one of these markets, the sector could reduce activities in the affected market and focus on one of the other markets.

In relation to the specific objective, one of the risks could be unwillingness on the part of the private forest business sector to participate with formal community enterprises in legal harvesting and trade activities, but this is unlikely as these activities are the pillars of sustainable forest management and can ensure an improved quality of life for the local communities in the long term.

There is currently a forest concessions system in place, where a few concessionaires already have FSC certification, some are in the process of obtaining certification and the rest do not have the required technical information to obtain certification. In the case of forest industries, very few are implementing chain-of-custody systems, but it is expected that this number will increase as the international markets are increasingly demanding those systems as part of their purchasing requirements.

3.5.2 Sustainability

Project beneficiaries are still interested in the achievement of the project objective. The transfer of knowledge and the dissemination and promotion of ITTO principles and guidelines will ensure that not only forest producers but civil society at large will become aware of the need to produce traceable products and thus ensure that timber activities are no longer considered to be plundering forest resources and can actually contribute significantly to the GDP, considering that Peru has one of the largest tropical forest areas in the world.

The technical assistance provided by the CNF (National Forestry Chamber) will ensure the practical application of the knowledge acquired through training courses for production forest management stakeholders represented by forest concession holders, native communities and forest enterprises.

- 38 - In view of the institutional support it enjoys and the experience it will have gained through the implementation of the project, the CNF, or one of its associated institutions, plans to become a certifying agency to certify the legal origin of timber through the traceability system. The income derived from the provision of this service will guarantee the long-term sustainability of this traceability initiative, while the production of certified timber will open up new markets that were previously inaccessible because of their stringent requirements and demands.

A forest certification consultative committee will be set up during the implementation of the project. This committee will be made up of representatives from private and public institutions of the forest sector and will be chaired by the CNF as the agency responsible for promoting and processing the certification of timber from managed forests. To this end, the traceability system developed by the project will be used for the issuing of relevant certificates. A list of potential institutions to take part in this committee is given below:

 AIDER (NGO)  PRODUCE  National Forestry Chamber  General Forest and Wildlife Directorate  Regional Governments of Ucayali and Madre de Dios  ADEX – Exporters’ Association  Forest concessionaires associations  Timber industry associations  Native communities organization

CNF will set up a certification management unit within its organizational structure to be based in Lima. This unit will be coordinated by a forest engineer and will have regional offices in Arequipa, Madre de Dios and Ucayali. An operational manual will be prepared to be incorporated into CNF’s organizational system. Funding will be secured by charging services provided so as to cover the operational costs of the certification process.

- 39 - PART 4. IMPLEMENTATION ARRANGEMENTS

4.1 Organization structure and stakeholder involvement mechanisms

4.1.1 Executing agency and partners

The National Forestry Chamber (Cámara Nacional Forestal – CNF), with the support of AIDER, will be responsible for the implementation of the project through a steering committee made up of representatives of the government, the private sector and the organized civil society. To this end, the participation of various forest-related organizations will be ensured, including public agencies, NGOs, and forest industry management committees, among others. All of these interested parties will be involved in work meetings, training, investment promotion, technical assistance, and national and international trade promotion, with a view to improving the productivity of the timber industry for the production of higher value-added products.

The main objectives of the National Forestry Chamber are to promote the sustainable use of forest resources, harmonizing the principles of conservation with technology and economic and social development, and to achieve efficient and sound forest policies to encourage forest management, industry, trade and the promotion of exports. The CNF has been working with forest stakeholders that depend on forest activities for their subsistence. Past experiences of the CNF include ITTO Project PD 421/06 (F) “Strengthening of the Production Chain for Timber from Forest Concessions and Other Forests under Management”, which has been strengthening the articulation of forest production chains (forest-industry-consumer) thus promoting legal timber trade.

The project organizational chart is shown below: Steering Committee: CNF, ITTO, DGFFS, AIDER Cooperating agencies: Executing agency: DGFFS, AIDER National Forestry Chamber Consultative Committee: Universities, timber producer associations, native communities, forest concessionaires, exporters Coordination, administration, associations, regional governments, accounting and monitoring MINCETUR, PRODUCE, CNF, DGFFS, AIDER Project Director

Traceability unit Promotion and training unit

Ucayali Area Madre de Dios Area Coordinator Coordinator

- 40 -

4.1.2 Project management team

The project management team will include personnel from the National Forestry Chamber, AIDER and consultants. The team will be coordinated by a Project Director with experience in the management of community forestry development projects.

The team will also include a forest specialist with specific knowledge on traceability, certified timber marketing and VFC, as well as two forestry experts with experience in the management and coordination of projects.

A consultant will be hired for the development of a software package for the traceability system. Annex 3 contains the terms of reference for the personnel to be hired with ITTO funds.

4.1.3 Project Steering Committee

A Steering Committee will be established at the highest level of the project organizational structure. This Committee will be responsible for supervising the project, reviewing and approving budget expenditures, and reviewing the implementation of activities. The Committee will be made up of a representative of each of the following institutions: National Forestry Chamber (CNF) as chairperson, International Tropical Timber Organization (ITTO), General Forest and Wildlife Directorate (DGFFS- MINAG) and the Association for Integrated Research and Development (AIDER). The Project Director will act only as the Secretary of this Committee.

4.1.4 Stakeholder involvement mechanisms

The primary project stakeholders include native communities, who will participate in project activities through their regents and technical native personnel responsible for forest management. Forest concessionaires and primary and secondary processing industries, as primary project beneficiaries through their legal representatives or managers of the target management areas, will also actively participate in project activities. These mechanisms will help primary beneficiaries to acquire more knowledge and tools on timber traceability, thus allowing then to raise their level of competitiveness, access certified timber product markets and maintain their positioning in both national and international markets.

Secondary project stakeholders (Regional Governments, DGFFS, ADEX, and native community regents), interested parties of the sustainable forest management sector, through their respective authorities, will be directly and indirectly involved in accordance with the requirements of the different project activities. Furthermore, they will acquire in-depth knowledge about the timber traceability system developed by the project.

Tertiary stakeholders will include public organizations (OSINFOR, MINCETUR, PRODUCE, UNALM) and international organizations, who will be asked to participate in consultative processes on the new timber traceability system designed and implemented by the project, so as to contribute to sustainable forest management through a monitoring system that will guarantee the legal origin of timber.

4.2 Reporting, review, monitoring and evaluation

The following reports will be submitted:

 Inception report (upon project approval)  Yearly plan of operation (together with the inception report)  Progress report (by 28 February and 31 August of each year and/or 4 weeks before the date of a review mission)  Technical report (every six months during project implementation)  Financial reports (on an annual basis and upon project completion)  Project completion reports (upon project completion)

Reports will be presented with the aid of audio-visual materials (optional).

- 41 - A progress report will be delivered at least four weeks before the date of a scheduled ITTO review mission.

A basic monitoring system will be applied that will include internal and external monitoring procedures as described below.

Internal monitoring: The system will ensure the successful implementation of the Project including adjustments of the work plan and/or YPO and the implementation of defined corrective actions. Internal monitoring will include the following subjects:

 Follow up of commitments resulting from the agreement between ITTO and the Executing Agency;  Progress and proper execution of work;  Timely delivery and quality of outputs;  The extent to which the specific objective has been achieved;  Social, economic and environmental impact and the effect of mitigating measures.

External monitoring: the external monitoring of the project will be undertaken by ITTO, in cooperation with donors as appropriate, to supervise project implementation. The purposes of this process will be as follows:

 assess whether the project is proceeding according to the agreed work schedules, so that the necessary ITTO actions (e.g. payments to the Executing Agency) may be taken;  propose and participate in any necessary reviews of the Project as a result of these assessments; and  report to the Committees and the Council on the situation and completion prospects for the project.

The evaluation of the project will be based on the systematic and objective collection of information, on the spot assessment and analysis of the validity, design, appropriateness, performance and the impact of the project.

The project mid-term evaluation will include the systematic and objective collection of information, on the spot assessment and analysis of the validity, design, appropriateness, performance and the impact of the project during its implementation stage. Mid-term evaluations will be carried out in circumstances when:

 there are problems in project implementation, upon request from the ITTO secretariat, donors or the Project Steering Committee, as appropriate;  the need for mid-term evaluation was foreseen at the early stage of project development or implementation.

The ex-post evaluation will include the systematic and objective collection of information, on the spot assessment and analysis of the validity, design, appropriateness, performance and the impact of the Project after its completion, with the aim to establish the extent to which it achieved its objective, its degree of effectiveness and efficiency, as well as its sustainability.

4.3 Dissemination and mainstreaming of project learning

4.3.1 Dissemination of project results

Project results will be disseminated through seminars, workshops, conferences, manuals, production guides and brochures. They will also be posted on two existing electronic platforms: CNF and DGFFS-MINAG websites, so as to ensure widespread dissemination at the national and international levels. In addition, the project’s professional staff will be available to users, both in person and through the internet, for additional enquiries and consultations.

- 42 -

4.3.2 Mainstreaming of project learning

The project will be implemented with the active participation of forest concessions, native communities and industrialists. There is a high degree of interest in timber products that warrants the provision of technical assistance and training as required for the development of timber products of verified origin for expanded, more demanding markets, enhancing negotiation capacities at the international level. Thus, the project stems from the need of many producers to improve their entrepreneurial skills and promote new investments to achieve a timber industry that better utilizes forest resources, undertaking a commitment for sustainability in compliance with forest management plans, ensuring timber traceability, and generating wealth and employment for sustainable social and economic development.

Project experiences will be systematized in a printed publication that will be disseminated among project beneficiaries and all interested stakeholders related to this field.

- 43 - ANNEX 1. PROFILES OF THE EXECUTING AND COLLABORATING AGENCIES

NATIONAL FORESTRY CHAMBER

Address: Ramón Dagnino N° 369. Jesús María, Lima 11, Perú. Telephone: (511) 6516197 Fax: (511) 6288869 E-mail: [email protected] Website: www.cnf.org.pe

The National Forestry Chamber (Cámara Nacional Forestal – CNF) is a non-profit civil association established on 16 August 1989 after a consensus-building process between the most representative institutions at the national level in the fields of forest production and conservation as well as forest and conservation professionals.

The objectives of the CNF are as follows:

 Promoting the sustainable use of forest resources, harmonizing the principles of conservation with technology and economic and social development;  Coordinating national forest activities, and acting as the main interlocutor of the private forest sector before public and private institutions and agencies;  Proposing and achieving efficient and sound forest policies to encourage forest management, industry, trade and the promotion of exports;  Protecting the national forest production;  Building up and disseminating an adequate image of the forest activity at the national level consistent with the magnitude of the resource and its territorial significance;  Providing feedback/making statements on issues of national interest;  Designing and implementing research, training and development projects related to forestry.

Organizational chart

Asambleassembly

ConsejoExecutive DirectivoCouncil

GerenciaManagement

SecretariaSecretariat FinanceTesorería Dept

Projects Coordination

Administration

Pucallpa Tingo María Puerto Arequipa Maldonado Office Office Office Office

- 44 - The National Forestry Chamber is headquartered in the city of Lima, where it has an office that is conveniently equipped for ongoing communication via the internet and mobile telephones with its administrative offices in Pucallpa, Tingo Maria, Puerto Maldonado and Arequipa.

List of projects under implementation and completed over the last three years

Contributions Period Project Title Funding source National International Government Counterpart US$ US$ US$ US$ PROJECTS UNDER IMPLEMENTATION Valuation of Shiringa forests for the production of Nov. 2010- jebe with the participation FONDOEMPLEO 359,712 1,233,820 Nov. 2012 of rural hamlets and native communities in the Ucayali Region COMPLETED PROJECTS PD 23/00 Rev.4 (F): “Promotion and Transfer of International Oct. 2004 – Knowledge on Sustainable Tropical Timber 392,565 420,212 Dec. 06 Forest Management Organization - Models to Timber ITTO Producers” “Sustainable management of a Shiringa (Hevea brasiliensis) community Feb. 2008- Flemish Fund for forest as an alternative to 19,659.37 34,950 2009 Tropical Forests deforestation and forest degradation in the Peruvian Amazon Region” PD 421/06 Rev.2 (F): “Strengthening of the International Nov. 2007 - production chain for timber Tropical Timber 405,693 580,532 Sep. 2010 from forest concessions Organization – and other forests under ITTO management”

- 45 -

ANNEX 2. TASKS AND RESPONSIBILITIES OF KEY EXPERTS PROVIDED BY THE EXECUTING AGENCY

TERMS OF REFERENCE FOR PROJECT COORDINATORS

Qualifications

 Registered Forest Engineer  A minimum of 5 years experience in the management of forest development projects  Experience in the management of international cooperation funds  A minimum of 2 years experience in the forest and timber business  Knowledge of forest governance, forest management and forest certification issues

Duties

 Coordinating the technical and financial aspects of project implementation  Facilitating project planning, monitoring and evaluation  Establishing coordination mechanisms with the project collaborating agencies

TERMS OF REFERENCE FOR THE TECHNICAL ASSISTANT

Qualifications

 Forest engineer or degree in forestry  A minimum of 3 years experience in forest management and forest industry projects in the Amazon region.  Experience in timber production and marketing.  Ability to relate to indigenous communities.

Duties

 Coordinating with the Area Coordinator for the implementation of activities in the project area  Providing technical support to native communities and forest concessions in the activities designated by the Area Coordinator.  Providing logistical field support.

- 46 - ANNEX 3. TERMS OF REFERENCE OF PERSONNEL AND CONSULTANTS AND SUB-CONTRACTS FUNDED BY ITTO

TERMS OF REFERENCE FOR THE PROJECT DIRECTOR

Qualifications

 Registered Forest Engineer  Preferably with an advanced academic degree  A minimum of 15 years experience in the field  Experience in the formulation, implementation and management of forest projects in the Amazon Region with the participation of native communities, forest concessions and timber processing industries  Experience in timber marketing and export  Verbal and written communication skills  Experience and leadership skills for the coordination of international cooperation projects

Duties

 Managing the technical aspects of the project and the implementation of activities  Managing the technical team for project implementation  Preparing project reports and proposing plans of operation for the project in accordance with the provisions of the ITTO Project Manual  Promoting and organizing meetings between authorities and timber industrialists at the national and regional levels for the signing of agreements  Managing the technical assistance required for the traceability system

TERMS OF REFERENCE FOR THE TRACEABILITY SPECIALIST

Qualifications

 Registered Forest Engineer.  Experience in forest traceability.  A minimum of 3 years experience in the forest industry.  A minimum of 2 years experience in rural development projects, sustainable management of forest resources and/or the active participation of timber producers and local communities.

Duties

 Coordinating, in cooperation with the Project Director, the work methodology for the implementation of project activities.  Coordinating the design of a traceability system model for the native communities and forest concessions.  Producing a procedural manual on the timber traceability system.  Providing technical assistance to native communities and forest concessions for the implementation of a timber traceability system.  Providing technical assistance to native communities and forest concessions so as to comply with national FSC standards.  Coordinating technical training activities for the management of the timber traceability system.

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TERMS OF REFERENCE FOR THE AREA COORDINATORS

Qualifications

 Forest Engineer.  Experience in business management.  A minimum of 2 years experience in rural development projects, sustainable management of forest resources and/or the active participation of timber producers and local communities.

Duties  Coordinating, in cooperation with the Project Director, the work methodology for the implementation of project activities.  Managing project activities in the field.  Participating in the design of a timber traceability system.  Participating in the formulation of a procedural manual on the timber traceability system.  Organizing the implementation of training workshops for native communities and forest concessions on business management tools and marketing of certified timber.  Organizing information events on timber traceability in their respective areas.  Responsible for monitoring native communities and forest concessions during the implementation of the timber traceability system.

TERMS OF REFERENCE FOR THE SYSTEMS CONSULTANT

Qualifications

 Knowledge of and experience in the development and operationalization of digital data management systems.  Knowledge of and experience in the timber production chain.

Duties

 Coordinating with the Timber Traceability Specialist and Project Director on the specific activities to be carried out for the implementation of a timber traceability system.  Developing, implementing and installing the timber traceability software.  Providing direct technical assistance and training to the technical team and project beneficiaries.  Cooperating with the Timber Traceability Specialist in the implementation of registers to be used in the timber traceability system.  Assist in the design of a technological package for digital timber traceability to be made available to other users of the timber production chain.

- 48 - ANNEX 4. RECOMMENDATIONS OF ITTO’S EXPERT PANEL

PD 621/11 Rev. 2 (M) Traceability of Timber Produced by Forest Concessions and Native Communities in Madre de Dios and Ucayali (Peru)

Assessment by the Forty-fourth Panel

A) Overall Assessment The Panel noted that the majority of the previous recommendations were addressed. The Panel recognized the clear definition of the problem to be address by the proposal, but felt that the linkages within the problem tree should be improved.

B) Specific Recommendations Description of modifications made

1. Under the problem tree, clear linkages should be The effects in the problem tree have been established between the key problem and the revised and cause 1 has been more clearly effects. The Panel felt that the effects as currently drafted. described are not directly related to the key problem. Also revise cause 1 as it reads the same as the key problem. If necessary, update the objective tree accordingly;

2. Scale down Activity 1.1 by taking into account the The budget for activity 1.1 has been reduced. results of the various types of traceability technologies tested under the pre-project PPD 138/07 Rev.1 (M) and thus reducing its budget;

3. Re-allocate the costs under sundry, such as Personnel and office rental costs, which were facilitator and speaker to Sub-contracts, and office previously included under item 60, were rent (counterpart contribution) to Capital Items: reallocated under items 20 and 40 respectively.

4. Include an Annex that shows the overall This annex has been included as requested. All assessment and specific recommendations of the recommendations have been addressed and 44th Expert Panel and respective modifications in incorporated into the project document. All tabular form. Modifications should also be modifications made have been highlighted (in highlighted (bold and underline) in the text of the bold and underlined) throughout the revised revised proposal. project proposal.

- 49 - ANNEX 5. MASTER BUDGET

Quantity Unit cost Source Year Budget TOTAL Outputs & Activities Inputs (I - E) Item Fares -- air travel 10 180 I 1 33.1 1,800 Consultants -- systems analyst 6 2,000 I 1 13.1 12,000 Days -- truck rental 30 40 E 1 33.3 1,200 Days -- boat rental 10 60 I 1 33.3 600 Days -- boat rental 10 80 E 1 33.3 800 Days - driver 15 40 I 1 61 600 Days -- DSA 40 40 I 1 31.1 1,600 Gallons -- fuel and lubricants 100 5 I 1 33.3 500 Activity 1.1: Design, develop and M/M - forest technician 6 500 E 1 12.2 3,000 validate a traceability system Months -- office supplies 3 40 E 1 54 120 Months -- office supplies 3 40 I 1 54 120 Months - local transport 3 120 I 1 33.1 360 Months - local transport 3 120 E 1 33.1 360 Months -- Information gathering services 8 400 I 1 61 3,200 Months -- data entry services 6 300 I 1 61 1,800 Units - laptop 1 1,000 I 1 44.1 1,000 Units -- software license database 15 330 I 1 44.1 4,950 Unit -- software license 1 700 I 1 44.1 700 Activity 1.2 Promote the Fares -- air travel 3 180 I 1 33.1 540 traceability system and the Fares -- air travel 6 180 I 2 33.1 1,080 marketing of certified timber Fares -- air travel 1 180 I 3 33.1 180 M/D -- participants in events 90 20 E 1 12.3 1,800 M/D -- participants in events 180 20 E 2 12.3 3,600 M/D -- participants in events 90 20 E 3 12.3 1,800 Days -- truck rental 28 40 E 2 33.3 1,120 Days -- boat rental 6 60 I 1 33.3 360 Days -- boat rental 12 60 I 2 33.3 720 Days -- boat rental 3 60 I 3 33.3 180 Days - driver 12 20 E 2 61 240 Days -- DSA 12 40 I 1 31.1 480 Days -- DSA 24 40 I 2 31.1 960 Days -- DSA 4 40 I 3 31.1 160 Events -- rental of premises 3 50 E 1 61 150 Events -- rental of premises 6 50 E 2 61 300 Events -- rental of premises 3 50 E 3 61 150

- 50 - Quantity Unit cost Source Year Budget TOTAL Outputs & Activities Inputs (I - E) Item Events -- speaker 3 100 E 1 24 300 Events -- speaker 6 100 E 2 24 600 Events -- speaker 3 100 E 3 24 300 Events -- facilitator 3 50 E 1 25 150 Events -- facilitator 6 50 E 2 25 300 Events -- facilitator 3 50 E 3 25 150 Events -- logistical services 3 100 E 1 61 300 Events -- logistical services 6 100 E 2 61 600 Events -- logistical services 3 100 E 3 61 300 Gallons -- fuel and lubricants 120 5 I 1 33.3 600 Gallons -- fuel and lubricants 240 5 I 2 33.3 1,200 Gallons -- fuel and lubricants 60 5 I 3 33.3 300 Months -- office supplies 24 40 I 2 54 960 Months - local transport 6 120 I 1 33.1 720 Months - local transport 12 120 I 2 33.1 1,440 Months - local transport 3 120 I 3 33.1 360 Months -- spare parts /computer equipment 6 60 I 1 52 360 Months -- spare parts /computer equipment 12 60 I 2 52 720 Months -- spare parts /computer equipment 3 60 I 3 52 180 Months -- web page updating services 10 120 I 2 61 1,200 Servings -- refreshments 90 2 I 1 61 180 Servings -- refreshments 180 2 I 2 61 360 Servings -- refreshments 90 2 I 3 61 180 Subcontract -- editing and publishing of systematization doc. 1 3,500 I 2 21 3,500 Subcontract -- editing and printing services / newsletters (2000 copies) 1 2,200 I 2 23 2,200 Subcontract --editing and printing services /leaflets (2000 copies) 1 600 I 2 22 600 Unit -- photo camera 1 300 E 1 44.3 300 Units -- folder with office supplies and photocopies 90 2 I 1 54 180 Units -- folder with office supplies and photocopies 180 2 I 2 54 360 Units -- folder with office supplies and photocopies 90 2 I 3 54 180 Unit -- screen 1 200 E 1 44.3 200 Unit -- multimedia projector 1 600 E 1 44.3 600 Activity 2.1: Develop training Fares -- air travel 10 180 I 2 33.1 1,800 workshops on timber product Courses -- rental of premises 6 50 E 2 61 300 monitoring and control Course -- facilitator 6 500 I 2 26 3,000 Courses -- logistical services 6 100 E 2 61 600 M/D -- course participants 120 40 E 2 12.3 4,800 Days -- DSA 30 40 I 2 31.1 1,200 Servings -- refreshments 360 2 I 2 61 720

- 51 - Quantity Unit cost Source Year Budget TOTAL Outputs & Activities Inputs (I - E) Item Units -- folder with office supplies and photocopies 120 2 I 2 54 240 Unit -- screen 1 200 E 2 44.3 200 Unit -- multimedia projector 1 600 I 2 44.3 600 Fares -- air travel 8 180 I 2 33.1 1,440 Fares -- air travel 2 180 I 3 33.1 360 Days -- DSA 40 40 E 2 31.1 1,600 Days -- DSA 10 40 E 3 31.1 400 M/M -- specialized technician 8 800 I 2 12.2 6,400 M/M -- specialized technician 2 800 I 3 12.2 1,600 Activity 2.2 Provide technical M/M - forest technician 6 500 E 2 12.2 3,000 assistance on timber traceability to Months -- office supplies 12 40 I 2 54 480 community enterprises and SMEs Months -- office supplies 3 40 I 3 54 120 Months - local transport 12 120 E 2 33.1 1,440 Months - local transport 3 120 E 3 33.1 360 Months -- Information gathering services 4 400 I 2 61 1,600 Months -- data entry services 6 300 I 2 61 1,800 Units -- GPS equipment 2 500 E 2 44.2 1,000 Units - laptop 15 1,000 I 2 44.1 15,000 Fares -- air travel 15 180 I 2 33.1 2,700 Fares -- air travel 15 180 I 3 33.1 2,700 M/D -- participants in field visits 32 40 E 2 12.3 1,280 Activity 2.3 Promote the sharing of M/D -- participants in field visits 32 40 E 3 12.3 1,280 experiences on timber certification Days -- DSA 45 40 I 2 31.1 1,800 and traceability among Days -- DSA 45 40 I 3 31.1 1,800 entrepreneurs, forest M/M - forest technician 5 500 E 2 12.2 2,500 concessionaires, native communities, professionals, civil Months - local transport 6 120 I 2 33.1 720 servants and other forest sector Months - local transport 6 120 I 3 33.1 720 stakeholders Months -- Information gathering services 4 400 I 2 61 1,600 Months -- data entry services 6 300 I 2 61 1,800 Units -- folder with office supplies and photocopies 32 2 I 2 54 64 Units -- folder with office supplies and photocopies 32 2 I 3 54 64 Activity 3.1 Develop training Fares -- air travel 6 180 I 1 33.1 1,080 workshops on business Fares -- air travel 6 180 I 2 33.1 1,080 management tools Courses -- rental of premises 4 50 E 1 61 200 Courses -- rental of premises 4 50 E 2 61 200 Course -- facilitator 4 500 I 1 26 2,000 Course -- facilitator 4 500 I 2 26 2,000 Courses -- logistical services 4 100 E 1 61 400 Courses -- logistical services 4 100 E 2 61 400

- 52 - Quantity Unit cost Source Year Budget TOTAL Outputs & Activities Inputs (I - E) Item M/D -- course participants 80 40 E 1 12.3 3,200 M/D -- course participants 80 40 E 2 12.3 3,200 Days -- DSA 18 40 I 1 31.1 720 Days -- DSA 18 40 I 2 31.1 720 Servings -- refreshments 240 2 I 1 61 480 Servings -- refreshments 240 2 I 2 61 480 Units -- folder with office supplies and photocopies 80 2 I 1 54 160 Units -- folder with office supplies and photocopies 80 5 I 2 54 400 M/M -- specialized technician 8 800 E 2 12.2 6,400 M/M -- specialized technician 2 800 E 3 12.2 1,600 Activity 3.2 Provide ongoing M/M - forest technician 3 500 E 3 12.2 1,500 technical assistance to community Months -- office supplies 12 40 E 2 54 480 enterprises and SMEs in order to Months - local transport 12 120 I 2 33.1 1,440 strengthen their certified timber marketing capacities Months - local transport 3 120 I 3 33.1 360 Months -- Information gathering services 3 400 I 3 61 1,200 Months -- data entry services 3 300 I 3 61 900 Activity 3.3: Establish and Fares -- air travel 12 180 I 1 33.1 2,160 maintain project coordination Fares -- air travel 12 180 I 2 33.1 2,160 Fares -- air travel 3 180 I 3 33.1 540 Fares -- air travel 5 180 E 1 33.1 900 Fares -- air travel 5 180 E 2 33.1 900 Fares -- air travel 3 180 E 3 33.1 540 M/M -- Participants in Consultative Committee meetings 50 40 E 2 12.3 2,000 Days -- DSA 60 40 I 1 31.1 2,400 Days -- DSA 60 40 I 2 31.1 2,400 Days -- DSA 15 40 I 3 31.1 600 Days -- DSA 25 40 E 1 31.1 1,000 Days -- DSA 25 40 E 2 31.1 1,000 Days -- DSA 15 40 E 3 31.1 600 Gallons -- fuel and lubricants 240 5 I 1 33.3 1,200 Gallons -- fuel and lubricants 240 5 I 2 33.3 1,200 Gallons -- fuel and lubricants 60 5 I 3 33.3 300 Report -- Auditing 1 1,200 E 1 62 1,200 Report – Auditing 1 1,200 E 2 62 1,200 Report -- Auditing 1 1,200 E 3 62 1,200 M/M -- Technical Assistant 9 900 E 1 12.1 8,100 M/M -- Technical Assistant 12 900 E 2 12.1 10,800 M/M -- Technical Assistant 3 900 E 3 12.1 2,700 M/M -- AIDER Coordinator 12 900 E 1 11.3 10,800

- 53 - Quantity Unit cost Source Year Budget TOTAL Outputs & Activities Inputs (I - E) Item M/M -- AIDER Coordinator 12 900 E 2 11.3 10,800 M/M -- AIDER Coordinator 3 900 E 3 11.3 2,700 M/M -- CNF Coordinator 12 900 E 1 11.2 10,800 M/M -- CNF Coordinator 12 900 E 2 11.2 10,800 M/M -- CNF Coordinator 3 900 E 3 11.2 2,700 M/M -- Project Director 12 2,600 I 1 11.1 31,200 M/M -- Project Director 12 2,600 I 2 11.1 31,200 M/M -- Project Director 3 2,600 I 3 11.1 7,800 M/M -- Traceability specialist 12 1,200 I 1 11.4 14,400 M/M -- Traceability specialist 12 1,200 I 2 11.4 14,400 M/M -- Monitoring officer 12 900 E 1 11.6 10,800 M/M -- Monitoring officer 12 900 E 2 11.6 10,800 M/M -- Monitoring officer 3 900 E 3 11.6 2,700 M/M -- Area Coordinator 21 900 I 1 11.5 18,900 M/M -- Area Coordinator 24 900 I 2 11.5 21,600 M/M -- Area Coordinator 3 900 I 3 11.5 2,700 Months -- office rent 12 1,400 E 1 41 16,800 Months -- office rent 12 1,400 E 2 41 16,800 Months -- office rent 3 1,400 E 3 41 4,200 Months -- spare parts /computer equipment 10 60 I 1 52 600 Months -- spare parts /computer equipment 12 60 I 2 52 720 Months -- spare parts /computer equipment 3 60 I 3 52 180 Months -- equipment maintenance and repairs 10 60 I 1 61 600 Months -- equipment maintenance and repairs 12 60 I 2 61 720 Months -- equipment maintenance and repairs 3 60 I 3 61 180 Months -- utilities 12 500 I 1 53 6,000 Months -- utilities 12 500 I 2 53 6,000 Months -- utilities 3 500 I 3 53 1,500 Meeting -- refreshments /Steering Committee 1 200 E 1 61 200 Meeting -- refreshments /Steering Committee 1 200 E 2 61 200 Meeting -- refreshments /Steering Committee 1 200 E 3 61 200 Meetings -- refreshments /Consultative Committee 5 200 I 2 61 1,000 Meetings -- refreshments /Coordination and monitoring 5 100 I 2 61 500 Units -- Computer equipment 6 1,000 E 1 44.1 6,000

- 54 -